Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BLACKFRIARS BRIDGEHEAD IMPROVEMENTS BILL

As amended, to be considered upon Monday, 20th June.

OLDHAM CORPORATION BILL [Lords]

To be read a Second time upon Monday, 20th June.

BRITISH TRANSPORT COMMISSION BILL (By Order)

Consideration, as amended, deferred till Monday, 20th June.

Oral Answers to Questions — HOUSING

Local Authority Houses (Programme)

Mr. Fernyhough: asked the Minister of Housing and Local Government and Minister for Welsh Affairs the number of council houses he expects local authorities to build during 1960.

The Minister of Housing and Local Government (Mr. Henry Brooke): It is too soon to make a reliable estimate, but at 31st March public authorities had 119,000 houses under construction, which was 12,000 more than a year before.

Mr. Fernyhough: Does the right hon. Gentleman remember taking part in a party political broadcast on 30th April in which he urged councils to speed up the building of flats, flatlets and bungalows and said that in a good many places we needed more council houses? Can he explain how it is that he is not getting this co-operation from the local

authorities? Can the right hon. Gentleman tell the House why it should be that since he became Minister of Housing and Local Government the number of council houses built has been going down year by year? Is he satisfied to see the figures dwindling when millions of people are still living in these uncivilised conditions to which they are condemned?

Mr. Brooke: I am getting co-operation from the vast majority of local authorities, with the exception of a few. Perhaps the hon. Gentleman failed to hear me say that there are 12,000 more houses under construction now than a year ago.

Mr. P. Williams: Can my right hon. Friend also give any estimate of the number of private houses being built in the current year?

Mr. Brooke: That is a different question.

Mr. M. Stewart: Has the right hon. Gentleman noticed that the number of council houses started in the first quarter of this year is about 9,000 less than the number started in the first quarter of last year and that the number of all houses started in the first quarter of this year is some 3,000 less than for the corresponding quarter of last year? Does he regard these figures as satisfactory?

Mr. Brooke: I did note those figures. I note that this year well over 300,000 houses are likely to be built in Great Britain, and I think that a very similar number will be completed next year.

Mr. Warbey: asked the Minister of Housing and Local Government and Minister for Welsh Affairs on what date he adopted the policy of restricting local authority housing programmes for 1960 to approximately the same level as in 1959.

Mr. H. Brooke: I have taken no decision to restrict the programmes of individual local authorities to the same level as last year. My general aim is to agree programmes that are reasonable in the circumstances of the authority concerned.

Mr. Warbey: Can the right hon. Gentleman explain why the Kirkby-in-Ashfield Urban District Council received


a letter last December from his Department saying that
Consideration has recently been given to the housing programme for 1960 and it has now been decided that this should be roughly the same as in 1959"?
It added these words:
No official circular is being issued on this occasion
Why is the right hon. Gentleman not prepared to come clean and to make a public statement of his policy instead of adopting this undercover way of attempting to impose new restrictions on local authorities?

Mr. Brooke: I have just made a public statement of my policy and stated it to Parliament. The local authority which the hon. Member mentions has had approved by me a programme for 1960 more than 50 per cent. higher that it had in 1959.

Mr. Warbey: May I take the opportunity of thanking the right hon. Gentleman for the action of his Department in increasing my local authority's housing allocation on the day after I put this Question down?

Mr. Brooke: It was not related to the Question. It was related to some additional information which became available, which indicated that the local authority could manage a larger programme.

Mr. M. Stewart: Is the right hon. Gentleman aware that what it adds up to is this: that a letter was sent to my hon. Friend's local authority of a character which indicated that it was the Ministry's general policy not to allow more building to be started this year than last; that that was the policy which he adopted, while being coy about putting it in a public circular, in December; that in February he said to me, in the course of debate, that the building of council houses was on the upgrade, although he knew that he had taken action to see that it should not be; that the figures for this year show that the starts of council houses are in fact on the downgrade compared with last year; and, finally, that he made this concession to my hon. Friend's local authority, out of line with the general policy which he has indicated, immediately after a Question was put down? Does he think that that does not show a certain lack of candour in the matter?

Mr. Brooke: What the hon. Member said is a travesty of the facts. I have stated my policy. I have stated that I have taken no decision to restrict the programmes of local authorities to the same level as last year. What I have done with regard to the local authority which has been mentioned proves the truth of that.

Subsidies

Mr. Frank Allaun: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he is aware that many local authorities are being forced by the removal of the general housing subsidy to confine their new houses to accommodating slum-clearance tenants; and if he will therefore restore the general housing subsidy so that overcrowded families and young married couples may have a chance of acquiring a house.

Mr. H. Brooke: I do not accept the suggestion that many local authorities cannot build houses for general needs without subsidy. Most authorities should be able to let new houses at rents the tenants can afford, provided, of course, that they charge reasonable rents for their existing houses. Those authorities who would be faced with unreasonably high rents and rates as a result of further building can apply for the special discretionary subsidy.

Mr. Allaun: Is the Minister aware that, as a result of his policy, thousands of families who have been for sixteen years on the housing lists, however overcrowded and desperate their situation, have no chance at all, and that some of these families even have to board out one or more of their children at night with neighbours? Since most of these people cannot afford to buy a house, what does the Minister advise them to do?

Mr. Brooke: I entirely agree that there are still very serious housing conditions in a number of the big cities. What I regret is that some of these big cities continue to subsidise tenants who do not need the subsidy, thereby retaining them in council houses which ought to become available for people on the waiting lists.

Mr. C. Hughes: Does not the right hon. Gentleman agree that this situation could be relaxed and alleviated if he


were to modify the formula for building council houses for special need? Will the 'Minister look at it again, because, as my hon. Friend says, the situation is extremely serious in many parts of the country?

Mr. Brooke: There is no formula for councils building houses for special needs. There are subsidy arrangements, and there is a discretionary subsidy for those which have to charge excessively high rents and excessively high rates. It is up to the local authorities, in my view, to use the subsidies wisely, and not to pay them out to people who do not need them.

Improvement Grants

Mr. Frank Allaun: asked the Minister of Housing and Local Government and Minister for Welsh Affairs how many of the 80,000 houses provided with a bath, hot-water system and other improvements in 1959 were owner-occupiers' or council houses and how many private landlords' houses; and approximately haw many years it will take to provide a bath for every family if this rate is maintained.

Mr. H. Brooke: I regret that information in the form asked for in the first part of the Question is not available for grant-aided improvements approved before 1st January, 1960. As to the second part, I can make no estimate, as the position is changing all the time. In the first quarter of this year, the rate at which applications for improvement grants were approved shows an increase to over 110,000 a year.

Mr. Allaun: Do not the Ministry's own figures show that only one half of 1 per cent. of private landlords have taken advantage of these improvement grants? Do not these figures show that most private landlords have failed, and, on the basis of last year's figures, will it not take more than forty years before every family in our country has a bath and an inside toilet, and, what is even worse, last year's rate is not likely to be maintained, since this resulted from the new grants which the Government have made?

Mr. Brooke: As I said, the rate is going up all the time, and this year's rate is considerably higher than last

year's. In fact, we know that in the first few months of 1960, one-third, or I should say 30 per cent., of all the privately-owned dwellings that were approved for improvement grant purposes were owned by private landlords and not owner-occupied. That is encouraging, so far as it goes.

Mrs. Slater: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what further proposals he has to encourage landlords to take advantage of the improvement grants.

Mr. H. Brooke: Helped by the House Purchase and Housing Act, 1959, the rate at which improvements are being undertaken with the aid of grant is now more than three times what it was a year ago. I want to see the rate go on increasing, and for this purpose I am taking steps by publicity to get the grant schemes more and more widely known.

Mrs. Slater: Does that mean that the publicity will be through the local authorities, or in what form is the Minister likely to use this publicity? As my hon. Friend the Member for Salford, East (Mr. Frank Allaun) has pointed out, if we go on only three times better than last year, it will take a good many years before all the people of this country have baths and inside lavatories, when we could save houses which might otherwise become slums.

Mr. Brooke: I agree with the hon. Lady that this is very important. The rate is improving, and the publicity arrangements include a new film which we have made and which is available for showing. They also include demonstrations of improved houses, and displays at agricultural shows, so as to interest people in the country, as well as at the larger annual exhibitions. Every further opportunity for publicity that I can get I shall take.

Dr. Stross: Could the right hon. Gentleman arrange for this film to be shown on television, so that some millions of people could thereby see it, and encourage the landlords to take some action?

Mr. Brooke: A shorter film has been shown on television.

Decontrolled Property (Rents)

Mr. Sorensen: asked the Minister of Housing and Local Government and Minister for Welsh Affairs, in view of the excessive rise in rents demanded by some landlords of decontrolled working-class property of over £40 rateable value, if he will introduce legislation to empower local authorities or himself to appoint officers who on request would indicate what would be a fair rent for such dwellings.

Mr. H. Brooke: No, Sir.

Mr. Sorensen: Could not the right hon. Gentleman look at this matter more sympathetically? Does he not appreciate that there are a number of working-class tenants who are now expected to pay £4 or £4 10s. a week because of the lack of any rent ceiling for property of over £40 in rateable value? Would not this be a helpful way of indicating what would be a fair rent for the benefit of both the tenant and the landlord?

Mr. Brooke: In the first place, there is not a great deal of property over £40 in rateable value which one would describe as working-class property. In the second place, rent control has done an infinite amount of damage to the proper maintenance of houses and the provision of houses to let, and I am not prepared to reintroduce control where it has ended.

Mr. M. Stewart: Is the Minister aware that we are getting complaints of this kind of thing from all over the country, as well as from my hon. Friend's constituency? I have had several complaints from Kew and from several parts of the country that landlords, armed with the power given to them by the Rent Act, are demanding exorbitant rents and even leaving their property unoccupied, realising that before long somebody will be driven by desperation to pay the exorbitant rents that are being demanded? Does the right hon. Gentleman think he can stand by and let this situation go on unchanged?

Mr. Brooke: This is very largely a London problem, and there is no doubt that the demand for property in London is very high, but if, in fact, the owners of these properties find that they cannot let them and they are standing empty, my belief is that they will ask for lower rents.

Mr. Lipton: Is not the Minister aware that in London, where the problem is at its worst, a scandalous victimisation of tenants is going on, and that poor people are being held to blackmail in present circumstances?

Mr. Brooke: It was to prevent that that we passed the Landlord and Tenant (Temporary Provisions) Act.

Mr. Sorensen: Is the Minister aware that, as an alternative to legislation, I have proposed that there should be a representative of the council in a purely advisory capacity to indicate what would be a fair rent? How does the Minister's argument apply to that proposal?

Mr. Brooke: The hon. Gentleman's suggestion would need some kind of enforcement, and enforcement would restore control. It is control which, as I have indicated, has done so much damage.

New Town Houses (Tenancies)

Mr. Gourlay: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he is aware that an applicant for a house in Basildon new town has had his application shelved by the Development Corporation through being unemployed as a result of an industrial dispute at the firm of Bonallack; and what instructions he has issued to development corporations regarding their action in such cases.

Mr. Parker: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he is aware that the Basildon Development Corporation has refused houses to six employees of Bonallack, Body Makers, to whom they had been allocated, because the persons concerned are involved in a wage dispute; and what instructions he has issued to development corporations regarding their action in such cases.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph): The Development Corporation has not refused houses to any employees of this firm.
It is the practice of corporations to make sure that prospective tenants are employed in the new town; but I understand that in the case to which the hon. Member for Kirkcaldy Burghs (Mr. Gourlay) refers, the Corporation agreed, as soon as the special circumstances were brought to its notice, that the applicant's


prospects of getting a house should not be prejudiced.
No instructions have been issued to development corporations about such cases, and it seems to me best to leave it to the corporations to deal with them as they arise.

Mr. Gourlay: Is it not a fact that one of the applicants was advised by the Corporation that he would be housed on 6th June and that last week he was advised that, unless he could satisfy the Corporation that he was in employment last Friday, he would not be allocated a house? Does not this resemble a point of strike-breaking, approved by his Department?

Sir K. Joseph: No, it does not. The procedure is that the development corporation of a new town, in order to satisfy itself that the essential feature of a new town—namely, the twinning of housing and local employment—is effective, inquires two weeks before a house is available whether the man concerned is employed. It does not inquire why a man is not employed. The man's position in this case is safeguarded.

Mr. Parker: Is the hon. Member aware that in order to obtain houses men have to have jobs in the new town? They put themselves down for a house and obtain a job there, and take lodgings in the new town to fill the job until the house is available. They put themselves on the housing list. There is then a trade dispute and they are thrown out of work. The result is that people who were about to get a house do not get it because, technically, they are not employed by the firm. This means that six people are in the position of having pressure put on them to go back to work or to give up all chance of getting a house.

Sir K. Joseph: The hon. Member is not correct. A man is employed for this purpose of a new town inquiry until he either is dismissed or quits the job. An industrial dispute is not relevant. Since this strike began the Corporation has supplied houses to nine employees of this firm.

Mr. Gourlay: The vital point is that all those persons were in fact employed by Bonallack's and that Bonallack's have taken the course of sending these men their cards with a view to forcing

them back to work in order to get houses. Had this happened last December we could have had a position in which forty employees were being forced to go without houses because of this principle.

Sir K. Joseph: No one is being denied a house because he has taken part in an industrial dispute. If he is dismissed or quits, then surely the new town corporation is entitled to inquire whether there is a prospect in the near future of his having employment in the new town.

Rent Act, 1957

Mr. Lipton: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what statistics he has to show that under-occupation of residential property in London has been reduced following the Rent Act, 1957.

Mr. H. Brooke: I have no statistics, but the census due to be taken next April will show what the position then is.

Mr. Lipton: Does not the Minister recall that one of his principal arguments in favour of the Rent Act was that it would help to ensure the full use of under-occupied premises and in that way make a substantial contribution towards meeting housing needs? Has not experience shown—and the next census will confirm it—that there are no under-occupied premises in many areas of London, including my own, so that this argument has proved to be a fraud and a sham, and that many thousands of people are being condemned to live in sub-human conditions in London for many years to come?

Mr. Brooke: I think all hon. Members who represent London constituencies may know of cases where under-occupation has ceased in the last two or three years. I put it to the House that the findings of the census will be extremely important for all assessments of housing policy.

Oral Answers to Questions — LOCAL GOVERNMENT

Ston Easton Park, Somerset

Mr. Robert Cooke: asked the Minister of Housing and Local Government and Minister for Welsh Affairs the present condition of Ston Easton Park. Somerset; and whether the future of this house of architectural interest has been safeguarded.

Sir K. Joseph: The house is deteriorating but still capable of restoration. It is protected by a building preservation order, and efforts to find a use for it are continuing.

Public Inquiries (Technical Officers)

Sir Richard Glyn: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will consider issuing a circular to local authorities stressing the importance of not requiring or inducing technical officers in their employ to give expert evidence at public inquiries, other than in accordance with their professional opinion.

Mr. H. Brooke: I do not think that it would be right for me to interfere in this way in the relations between local authorities and their officers.

Sir R. Glyn: Does not my right hon. Friend agree that it is very undesirable for local authorities to expect their officers to give evidence in such cases, because an officer is put in the position of either offending his employer or, perhaps, having to mislead the court as to what he really thinks? Is my right hon. Friend aware that there is considerable anxiety about this, as was shown in the long correspondence recently published in The Times?

Mr. Brooke: I do not think that there is as much practical difficulty about this as that correspondence would indicate. Of course, the officer is not just in the position of an expert witness; he is also the confidential adviser of the council. What I do agree is that he should not be required to disclose what advice he has given to the authority which he serves.

Residential Accommodation (Use)

Sir C. Thornton-Kemsley: asked the Minister of Housing and Local Government and Minister for Welsh Affairs, in view of his rejection of the appeal of Mr. Ancrum Evans against the decision of the London County Council that, although he has permission to use three designated rooms in his residence, 8 and 9 Eccleston Square, for office purposes, he should not be allowed to transfer the

permission to other rooms of an equivalent floor-space in the same inter-communicating building, whether he will state the policy of the Government with regard to the right of planning authorities to control the right of an individual to allocate rooms for professional purposes in his own house in the way that suits him best.

Sir K. Joseph: My right hon. Friend does not accept that this proposal involved only an equivalent exchange of floor space. The London County Council, whose power to control changes in the use of buildings derives from the Town and Country Planning Act, 1947, has stated in the development plan for the County of London that only in very special circumstances will permission be given for residential accommodation to be changed to some other use; and this policy has my right hon. Friend's full support.

Sir C. Thornton-Kemsley: Why should not an owner-occupier be allowed to use any rooms he pleases in his own house for the purposes of his own profession? Ought not such a case to be covered by the Use Classes Order?

Sir K. Joseph: There is ample space for professional and business users in London. This area is zoned residential.

Sir C. Thornton-Kemsley: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Motion for the Adjournment.

Houses, Carlton Gardens, Baker Street and Portman Square

Mr. Driberg: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will make a statement on the threatened demolition of three houses in Carlton Gardens, of 1 Baker Street, and of several houses adjoining it in Portman Square; and if he is satisfied that the existing machinery provides him with powers sufficient to ensure the preservation of buildings of architectural or historic interest.

Sir K. Joseph: My right hon. Friend is advised that none of these houses are now of such architectural interest that it would be right to insist on their preservation.
He is satisfied that he has sufficient power to ensure preservation in suitable cases.

Mr. Driberg: While that may be so, could the hon. Gentleman at least say what is to be put in place of the houses in Carlton Gardens? Will the scale and elevation be appropriate to the surroundings?

Sir K. Joseph: Yes, there is power in the L.C.C., and, in the case of Carlton Gardens, there will be a reference to the Royal Fine Art Commission to approve the replacement building before it can be erected.

Sewerage Works (Gas Liquor)

Mrs. Slater: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what further research has been undertaken on the problem of gas liquor being processed by sewerage works.

Sir K. Joseph: Research continues: a new large pilot plant is about to start work on the subject.

Mrs. Slater: Does the hon. Gentleman know how long this research is likely to take, because in Stoke-on-Trent this is becoming a very real problem, and it will mean that the whole sewerage works may be put out of action by the amount of gas liquor which we have to turn into it?

Sir K. Joseph: I realise that this is locally a serious problem, but the hon. Lady must accept that it is a very difficult problem to solve. I will write to her, if I may, giving her the technical details.

Land (Rehabilitation)

Mr. Boyden: asked the Minister of Housing and Local Government and Minister for Welsh Affairs how much grant aid his Department made available during 1959 to local authorities for schemes of industrial land reclamation such as removing or planting up colliery spoil heaps and rehabilitating derelict industrial land.

Sir K. Joseph: Grant amounting to £1,838 was approved for this purpose under the National Parks and Access to the Countryside Act, 1949. The Board of Trade approved grants totaling

£103,423 under Section 5 of the Distribution of Industry Act, 1945, towards reclamation works in development areas.

Mr. Boyden: Does not the Parliamentary Secretary agree that this is pitiful? Is not this a very big problem which needs thoroughly looking at and the provision of a good deal of public money and drive from his Ministry?

Sir K. Joseph: It is open to local authorities in National Parks or areas of outstanding beauty to make proposals. Those were the proposals for which help was given.

Mr. Boyden: asked the Minister of Housing and Local Government and Minister for Welsh Affairs how many local authorities have applied for assistance for schemes to rehabilitate industrial sites following the passing of the Local Employment Act; and how many of these schemes have been approved by him.

Sir K. Joseph: Nine local authorities in England and Wales have made inquiries about grant under the Act, but no formal applications have yet been made, and no approvals given.

Mr. Boyden: Is not this a further example of pitiful legislation and a pitiful attitude on the part of the Government? Parts of the country such as the north of England have large areas of industrial dereliction left by absentee Tory industrialists in the past, and the Government now turn round to the local authorities and say, "It is your job to clear it up" and offer £5,000 or £6,000 to them in the process of doing it. Is it not time that the Government got to grips with this problem?

Sir K. Joseph: The hon. Member should have a word with local authorities in the areas concerned. Under the Act they are free to inquire about their proposals. A memorandum telling them about the financial arrangements is under preparation.

Mr. C. Hughes: What steps do the Minister and his Department intend to take to acquaint local authorities of the facilities which exist under the Act?

Sir K. Joseph: The Act has just been published and the evidence of nine local authorities' proposals or inquiries surely shows that they are aware of these facilities.

Mr. MacColl: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what are the main facilities available to local authorities outside the development districts for the acquisition or rehabilitation of derelict, neglected or unsightly land; whether the is satisfied that these facilities are adequate; and what assistance is available from the Exchequer for these purposes.

Sir K. Joseph: Powers for local authorities to acquire land, including derelict land, and to develop it for particular purposes are contained in numerous Statutes. Where other powers are not available, Section 89 of the National Parks and Access to the Countryside Act, 1949, enables local planning authorities to plant trees and carry out works to restore derelict land, and to acquire land compulsorily for these purposes. Outside development districts, Exchequer assistance may be given where the land is in a National Park or area of outstanding natural beauty. My right hon. Friend is satisfied that these powers are adequate.

Mr. MacColl: Is the Minister aware that there is not much land on Merseyside which is in a National Park? Is he further aware that on planning grounds it is highly desirable that developed sites should be used by industries rather than virgin land, and that everything should be done to make them attractive? Is he aware that derelict buildings constitute a source of and incitement to wilful damage and pilfering and are a great menace from the point of view of delinquency. Bearing all these points in mind, will the hon. Gentleman press for action to be taken?

Sir K. Joseph: Local authorities in development districts already have these powers. The hon. Gentleman probably knows that an expensive site subsidy can sometimes be claimed if derelict land is used for housing purposes.

Mr. Deedes: As a matter of interest, has my hon. Friend any figures to show what use local authorities have made of these powers?

Sir K. Joseph: I gave some answers earlier this afternoon which apply partly to that, but it is really another question which perhaps my hon. Friend will put down.

Piped Water, Deopham and Hackford

Mr. Collard: asked the Minister of Housing and Local Government and Minister for Welsh Affairs on what date he approved the provision of piped water to the villages of Deopham and Hack-ford in Norfolk.

Sir K. Joseph: My right hon. Friend approved the scheme for supplying these villages with piped water and authorised the local authority to seek tenders for the work on 26th February.

Mr. Collard: Is my hon. Friend aware that now, at the end of May, the Fore-hoe and Henstead Rural District Council has not even advertised for tenders? Does not he agree that the authority is handling this matter in a very leisurely fashion? I appreciate the many preoccupations of local authorities, but does not my hon. Friend agree that they really must get a move on in these matters once he has given permission for them to go ahead?

Sir K. Joseph: I understand that contract documents are not yet ready, but I am sure that the local authority will get them ready as soon as possible.

Exchequer Grants

Mr. M. Stewart: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether it is still the policy of Her Majesty's Government, as declared in the White Paper on Local Government Finance, Command Paper No. 209, 1957, to reduce the proportion of grants to rates, in local government expenditure, below that of 6 to 5.

Mr. H. Brooke: What the White Paper said was that it is most important to reduce the dependence of local government on Exchequer grants if it can possibly be done. That must be true; but the context was the Government's decision to make some small reduction in the grants following the increased product of rates due to re-rating of industry to 50 per cent.

Mr. Stewart: Is the right hon. Gentleman aware that he has not quoted the White Paper quite correctly? It mentions a proportion of 6 to 5 and then says that it is most important to reduce this


dependence of local authorities on Government Exchequer grants. In that context "this dependence" means, presumably, the dependence to the extent of a 6 to 5 proportion. I am asking the Minister whether it is the policy of the Government to reduce that proportion?

Mr. Brooke: No, Sir. The hon. Member is reading rather too much into this. Paragraphs 26 to 29 of the White Paper must be read together. There was at that time a proposal to increase the degree of rating of industry and it afforded an opportunity to diminish the dependence of local authorities on Exchequer grants. Surely it is desirable that, as far as possible, local authorities should raise their own revenue.

Mr. Stewart: May we get it clear that this paragraph 26 does not mean what it says? Will the Minister answer this question categorically? Is it the policy of the Government to reduce the proportion of grants to rates below that of 6 to 5 calculated at the time of the White Paper?

Mr. Brooke: The White Paper means exactly what it says. There is nothing sacred about the proportion of 6 to 5. If the hon. Member is insinuating that the Exchequer is likely to do less than its share in support of local revenues, he is wrong.

Several Hon. Members: rose—

Mr. Speaker: Order. The discussion is getting rather wide for Question Time. We must get on.

Sea Defence Works

Mr. Braine: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what recent representations have been made to him by local authorities in coastal areas with regard to the sharing of financial responsibility for the cost of sea defences; and what replies he has made.

Sir K. Joseph: My right hon. Friend has received representations from a number of local authorities that the full cost of sea defence works should be borne by the Exchequer. They have been informed that he sees no reason for changing the arrangements whereby local authorities in the coastal areas are responsible for work under the Coast Protection Act, 1949, but are assisted, where appropriate, by Exchequer grants.

Mr. Braine: Is my hon. Friend aware that, while the Government give most generous assistance towards new works, no assistance is given in respect of maintenance and that, as a result of the new works carried out in recent years, the cost of maintenance has risen largely? In view of the fact that representations have been made by very important local authorities throughout the country, would my hon. Friend undertake—I do not expect an answer now—to look into this matter particularly with the Ministry of Agriculture, Fisheries and Food to see whether a new deal for coast protection authorities and river boards might be effected?

Sir K. Joseph: Authorities whose rate resources in relation to population are low already get help towards maintenance costs from the rate deficiency grant.

Captain Pilkington: Will my hon. Friend bear in mind that the burden falls heavily on individual householders as well?

Oral Answers to Questions — NIGERIA

Civil Servants (Lump Sum Compensation Schemes)

Mr. Tilney: asked the Secretary of State for the Colonies whether the recommendation contained in Annex II, paragraph III 6 (b) in the report of the Nigeria Constitutional Conference, 1957, to the effect that lump sum compensation should be computed with reference to an officer's final pensionable emoluments, is still operative.

The Secretary of State for the Colonies (Mr. Iain Macleod): In undertaking a review of pensionable salaries last year the Nigerian Governments attached a condition that the review should not affect pensionable emoluments for the purpose of the lump sum compensation schemes. Since without this condition no review would have been held, my predecessor accepted it as a variation of the arrangements made with the Nigerian Governments at the 1957 Constitutional Conference.

Mr. Tilney: Will my right hon. Friend bear in mind that the comparatively low level of salaries in the last three years has been accepted by overseas civil servants in the belief that they would be


compensated by the lump sum compensation? Does not this call in doubt the value of all agreements with emerging territories to the detriment of the morale of civil servants, and why has not this been announced before?

Mr. Macleod: With respect, I think that my hon. Friend goes too far. The dilemma which obviously faced my predecessor was that unless he agreed to this variation of the 1957 Agreement there would have been no review, there would have been no more compensation paid and the officers would not have received the increase in pensionable salary which they now have. Bearing that in mind, and looking back on it. I am sure that his decision was in their interests.

Dame Irene Ward: Will my right hon. Friend tell me whether the "dilemma" is not really the Treasury?

Mr. Macleod: Not at all. The Government of Nigeria in this instance were more than reluctant, they did not intend to have a review of this sort unless it did not apply to the category to which the Question of my hon. Friend is directed. Therefore, if my predecessor had not accepted this decision there would have been no salary review.

Oral Answers to Questions — KENYA

Land Development and Resettlement

Mr. Braine: asked the Secretary of State for the Colonies what progress has been made in implementing the proposals for land development in Kenya outlined in the Report of the Kenya Constitutional Conference, Command Paper 960; and what representations have been made to him by the Kenya National Farmers' Union on the subject.

Colonel Beamish: asked the Secretary of State for the Colonies what consideration he has given to the views expressed by the Kenya National Farmers' Union under the heading "Defence of Kenya's Economy"; and if he will now make a statement about the proposal to set up a land trust fund.

Mr. Iain Macleod: The President and Vice-President of the Kenya National Farmers' Union put their views to my

noble Friend and myself in March and April. I was able to discuss these views subsequently with the Kenya Minister of Agriculture who is working out the detailed proposals for a land development and resettlement scheme. As hon. Members may have heard, it was announced recently in the Kenya Legislative Council that if a suitable scheme could be prepared which would attract international finance at the rate of at least £1·5 million a year, Her Majesty's Government have undertaken to provide, up to March, 1964, Exchequer loans of £3·15 million for land purchase.

Mr. Braine: Is my right hon. Friend aware that, since the Lancaster House Conference, time has been running out very fast? Does not he recognise that there is a growing lack of confidence among Europeans in Kenya, especially among those anxious to work with Africans in the development of the country? Is he seized of the importance of an early decision in this matter in order to restore—I emphasise the word—confidence in Kenya?

Mr. Macleod: Yes, and I should have thought that the announcement of the money provided by Her Majesty's Government, which is quite separate from the undertaking to underwrite given at the Lancaster House Conference, on the one side, and the action of the Kenya Minister of Agriculture in working out this pilot scheme—which I much 'welcome—on the other, show that in both countries we understand it.

Colonel Beamish: Is my right hon. Friend aware of the opinion which is very widely held that not only the political stability and confidence but also the whole economic progress of Kenya depends to a large extent on detailed decisions about this question?

Mr. Macleod: I agree with my hon. Friend, but I suggest that we must keep the two things absolutely distinct. I hope—there are hopeful signs that it will be so—that the World Bank will join in schemes of development and resettlement. But we must face the fact that were these schemes to be basically compensation schemes, we could not hope to attract international finance to them.

Lawlessness

Mr. Biggs-Davison: asked the Secretary of State for the Colonies, in view of the recent lawlessness in Kenya, whether he is satisfied that there has been no revival of Mau Mau activities including oath taking; and if he will make a statement.

Mr. Iain Macleod: The Kenya Government are watching closely for any signs of a revival of the Mau Mau organisation, and are investigating recent reports of oath-taking. But, although there has been some increase in lawlessness there is so far no evidence to show that any lawless act or crime has been specifically committed in furtherance of Mau Mau.

Mr. Biggs-Davison: Will my right hon. Friend assure the House, and assure Kenya, that no official endorsement or encouragement will be given to any political organisation which whitewashes Jomo Kenyatta and therefore the bestialities of Mau Mau?

Mr. Macleod: The attitude of Her Majesty's Government was made absolutely clear in this House in my last statement and by the Governor of Kenya in his statement on 9th May.

Mr. Callaghan: Will the Colonial Secretary consult with the Governor to see what is to be done about the growing unemployment in Nairobi and in the Colony generally? is not it likely that men who are unemployed are much more liable to give way to violent practices than those who have a steady and a regular job?

Mr. Macleod: There are later Questions on the Order Paper on that point. Certainly unemployment in Nairobi is a disturbing factor and one which I know is very much in the mind of the Kenya Government.

Manyani Detention Camp

Mr. Stonehouse: asked the Secretary of State for the Colonies what scale of diets is allowed at the Manyani Special Detention Camp; and whether detainees can apply for transfer to another scale.

Mr. Iain Macleod: The new diet scales for detainees which were introduced on 19th January are set out in the Kenya Gazette Supplement No. 5 of 1960, copies

of which are in the Library of the House. The diets are based on maize meal but detainees may apply for issues of rice, wheat and millet flour instead. Detainees are assigned to diet scales according to whether they are doing heavy work, ordinary work or no work at all.

Mr. Stonehouse: Would the Colonial Secretary not agree that, in view of the fact that most of these detainees have been imprisoned without trial for six or seven years, that they are kept in prison although the state of emergency has been brought to an end, and that they are not allowed to initiate appeals for their release, it is a matter of great importance that they should be subject to good treatment? Has he assured himself that that is the case and that, on the question of diets, the applications for transfer to the higher scales have been genuinely considered?

Mr. Macleod: Detainees are much better off and on higher scales than the prisoners. A memo was sent to me on 11th January from people in this camp and the scales were raised to these new scales on 19th January. On the question of transfer, I am informed that, although it is possible to transfer, in fact few applications have been made to do so.

Mr. S. Silverman: Can the right hon. Gentleman tell the House of any precedents, at any time in the whole history of the British Commonwealth of Nations or any part of it, where any Government of any party in the British Commonwealth of Nations have claimed and exercised the right to keep in prison for years people against whom no charge has been made, who have never been tried and who have never been convicted at a time when there is no state of emergency in the territory?

Mr. Macleod: There has never been anything comparable to the evil of Mau Mau.

Detainees

Mr. Stonehouse: asked the Secretary of State for the Colonies if he can now announce when Mr. Jomo Kenyatta, Mr. Achieng Oneko and other political detainees will be released.

Mr. Iain Macleod: With regard to Kenyatta, I have nothing to add to my reply to mfr hon. Friend the Member


for Haltemprice (Mr. Wall) on 5th May. Achieng Oneko's case will be reviewed by the Appeals Tribunal next month. Other cases are, as I stated in my reply to the hon. Member on 14th April, regularly reviewed.

Mr. Stonehouse: Is the Minister aware that Mr. Oneko was acquitted of all charges brought against him of being an organiser of Mau Mau, but that notwithstanding this he has been kept in prison for seven years? Will the right hon. Gentleman personally intervene to make certain that this man is released? With regard to the political detainees in Nyasaland, will they be released before the Constitutional Conference takes place?

Mr. Macleod: I am not sure if the last part of that supplementary question is immediately relevant to the Question on the Order Paper, and I should like it tabled as a special Question. It is true that Mr. Oneko was acquitted on the charge of having a hand in the management of Mau Mau, but, as I am sure the hon. Member knows, those who tried the case said that they had no doubt that he was sympathetic to the Mau Mau cause. This case is being reviewed next month, which, after all, starts tomorrow, today being 31st May. I hope that it will be only a few days before I can let the hon. Member know the result of this review.

Organisation (Investigations)

Colonel Beamish: asked the Secretary of State for the Colonies if he will make a statement about the recent formation in Kenya of an organisation known as "Walinzi" or "Mutangiri"

Mr. Iain Macleod: As C.I.D. investigations into this organisation are still continuing, I would prefer not to make a statement at present.

Africans, Nairobi (Wages)

Mr. Swingler: asked the Secretary of State for the Colonies the present minimum wage for adult African workers in Nairobi; what proportion of African workers receive less than 180 shillings per month; and if it was with his authority that the Labour Commissioner in Nairobi recently stated that the adult African worker with a family needs a minimum standard of at least 180 shillings per month.

Mr. Iain Macleod: The present minimum adult monthly wage in Nairobi, including housing allowance, is 119½ shillings. The proportion of workers receiving less than 180 shillings a month is not known, but the average monthly wage of all Africans in Nairobi in 1959 was, including housing allowance, 204 shillings.
The Labour Commissioner did not speak with my foreknowledge, but I have no reason to question his estimate that a man, wife and two children in Nairobi need a wage, excluding housing allowance, of 182½ shillings; and it is the Kenya Government's policy eventually to reach this target.

Mr. Swingler: Does not this report of the situation reveal the seriousness of the roots of economic discontent in Nairobi? Is it not now quite clear from these revelations, even before receiving the Government's final report, that the majority of African workers in Nairobi receive a wage which is totally inadequate to maintain themselves and their families, and that there is a considerable proportion of them who cannot achieve this standard because they are unemployed? Therefore, should not urgent measures be taken by the Government to improve this position?

Mr. Macleod: There is a very big difference between the minimum wage and the average monthly wage, as the figures which I have given show, but I do not want to under-estimate the seriousness of this problem. I entirely agree with the hon. Member. I think that this is a most important matter and it is one to which the Kenya Government are giving very high priority indeed.

Mr. Callaghan: What does the Colonial Secretary mean by saying that eventually they hope to reach this standard? Are there active plans now which the Government propose to implement so that there can be a target date for reaching a standard of this sort? If not, cannot the Colonial Secretary invite the Colonial Development Corporation and other bodies to go to Kenya with a view to setting in hand an emergency programme to raise the standards there?

Mr. Macleod: I think that there is more to it than that. Questions of raising minimum standards must obviously


be related to the economic circumstances of the country. Otherwise, conceivably the matter might be made much worse. There is heavy unemployment in Nairobi. What I meant about the Kenya Government comes out more clearly on the next Question. There are two stages in which they are planning this advance, which is examined every six months by the Council of Ministers.

Mr. Swingler: asked the Secretary of State for the Colonies if his attention has been drawn to the recent evidence sent to him by the hon. Member for Newcastle-under-Lyme, showing that two-thirds of the African workers in Nairobi are undernourished and inadequately clothed, and that the wages of one-third are so low that they are unable to maintain their families in the city; and what consideration is being given by the Kenya Government to this.

Mr. Iain Macleod: I have seen the newspaper report which the hon. Member sent me, but I have not seen the detailed survey on which it seems to be based. The Kenya Government's immediate aim is to raise the minimum adult wage to a level where it can support a man and his wife, as a first step towards the goal of a level where it can support a family with two children.

Mr. Swingler: Is it not clear that the report of Mrs. Marian Forrester, of the Christian Council of Kenya, has revealed a very grave situation to which the Colonial Office does not seem to be sizing up at all? Is it not ridiculously complacent to say that they are working towards the provision some time in the future of subsistence for the African workers whilst hon. Members opposite are complaining about lawlessness and violence? No wonder there is lawlessness and violence. [Interruption.] Is it not the Government's responsibility to produce a plan which shows that the African workers will be given full employment and a satisfactory wage?

Mr. Macleod: I do not think that the hon. Member is accurate in saying that I have shown in my answers any complacency. My very first reply to him underlined the seriousness of the situation. When there is heavy unemployment in Nairobi, to try to deal at once with the problem of lifting up the minimum wage to the sort of levels the hon. Member is

suggesting would not help. People inevitably would do with fewer workers and unemployment would be increased. It is far better that this matter be kept under review by the Council of Ministers and that they move to these levels.

Mr. P. Williams: Will not my right hon. Friend agree that, whilst naturally accepting that African wages should be raised to a reasonable level as soon as possible, there is a great danger of creating a magnet in Nairobi to draw in labour from the land, and that the other half of the problem is to see that there is a proper programme of land consolidation and settlement?

Mr. Macleod: I agree with what has been said. Nairobi has been acting unquestionably as a magnet lately, and that has been in part the cause of the trouble. There have been signs that that position has eased, and for the last month or so there has been something of a return from the towns and a reversal of the flow which was so obvious only a short while ago.

Mr. Callaghan: Whether or not the Colonial Secretary is complacent, the House has a right to be satisfied that he and the Kenya Government have plans for dealing with this situation. Will he undertake to publish what economic or social proposals the Kenya Government have for meeting—not eventually, but within a measurable period of time the need for providing these people with the basic necessities of life?

Mr. Macleod: I have given the two different aims of the Kenya Government. If the hon. Member would like any detailed examination of them, perhaps he will table a Question to me for the first Tuesday after the Whitsun Recess when I will be first for Questions and I will give him as full information as I can.

Mr. Callaghan: This is a very serious matter with which we can hardly deal by question and answer. What is now coming out shows that there is a very important and serious situation to deal with. I therefore ask the Colonial Secretary if he will publish a statement of the detailed plans of the Kenya Government rather than that we should have an exchange at Question Time.

Mr. Macleod: I will certainly consider how that can be done. I should


have thought that as these questions have been asked in the House it would be better that answers were given in the House. If the hon. Member wants to find another method, I will be glad to consider that.

Oral Answers to Questions — SOUTHERN CAMEROONS

Airport, Tiko

Mr. Tilney: asked the Secretary of State for the Colonies what arrangements have been made for the operation of the airport of Tiko after 1st October, 1960.

Mr. Iain Macleod: After Nigerian independence the Southern Cameroons Government will operate Tiko Airport with staff lent by the Government of the Federation of Nigeria on a reimbursement basis.

Oral Answers to Questions — MALTA

Docks, Valetta

Mr. Awbery: asked the Secretary of State for the Colonies what structural changes have taken place in the docks at Valetta; and why the replanning work has been stopped.

Mr. Iain Macleod: No major structural changes have taken place, although essential preliminary works are under way. The replanning work has not been stopped.

Mr. Awbery: Is the Minister aware that twelve months ago we were promised that work would start on the docks immediately, but apparently nothing has been done, except the making of roads? That was stopped suddenly one month ago. Will the Minister tell us why the road making was stopped? Is he aware that the men have been told that Baileys are encountering some difficulties? If they are, can he tell us what the difficulties are, if they are with the Government?

Mr. Macleod: That supplementary question goes a long way wider than the Question on the Order Paper. I should like to look into the question of roads. Much other work has been going on, but I should like to look at that particular point. From the very beginning of this agreement Baileys have

suggested that there should be a wider agreement and a variation of the original plan. Discussions on that matter are still under way.

Oral Answers to Questions — GIBRALTAR

Spain (Passport Arrangements)

Mr. Dodds: asked the Secretary of State for the Colonies if he will make a statement on the lifting of passport arrangements between Spain and Gibraltar.

Mr. Iain Macleod: Passports are still generally required for travel between Spain and Gibraltar, but a visa abolition agreement between Spain and the United Kingdom was signed in Madrid on 13th May, and will come into force on 15th June. This agreement extends to a number of dependent territories including Gibraltar.

Mr. Dodds: I have made many criticisms of Spain's attitude to Gibraltar in the past. Is the right hon. Gentleman aware that this change of policy, which includes Gibraltar, is greatly welcomed by Gibraltarians, not so much for the benefits which it will bring, but because it is the first friendly gesture for years and there is a hope that, having started, there will be more to follow?

Mr. Jeger: While acknowledging this very beneficial relaxation of restrictions, may I ask the right hon. Gentleman to look into the question from time to time of further relaxations, as the position vis-à-vis Gibraltar and Spain is not yet back to what it was before the visit of Her Majesty the Queen to Gibraltar a few years ago?

Mr. Macleod: This is a very welcome improvement indeed. It will make a great difference to those who live in that area and wish to travel backwards and forwards.

Oral Answers to Questions — SEYCHELLES

Development Plan

Mr. P. Williams: asked the Secretary of State for the Colonies whether he will give a report on the progress being made with the development plan in the Seychelles.

Mr. Iain Macleod: In general a reasonable rate of progress is being maintained


in carrying out the projects listed in "A Plan for Seychelles" and a considerable number of schemes are under way. There are, however, some important aspects of the programme, such as the improvement of overseas communications, the establishment of a technical secondary school and the improvement of water supplies, on which it has not been possible to make as early a start as the Seychelles Government would have wished.

Mr. Williams: Is my right hon. Friend aware that the last matter he mentioned, namely, improvement of the water supplies, is perhaps one of the most important affecting this small but very pleasurable Colony? If the health and vitality of the Colony is to be improved, something must be done immediately to improve the water supply.

Mr. Macleod: Yes, I quite agree. The water supply is one of the most important points. The difficulty here in the end is the allocation of money. This is quite an expensive scheme and already a substantial Colonial Development and Welfare contribution has been made to it.

Mr. G. Thomas: Will the Secretary of State put in the OFFICIAL REPORT a list of the development activities which have been undertaken within the last eighteen months?

Mr. Macleod: Copies of "A Plan for Seychelles" are in the Library. I could circulate in the OFFICIAL REPORT a progress report on the work done, if that is what the hon. Member means.

Oral Answers to Questions — COLONIAL TERRITORIES

Resettlement Bureau

Mr. Chataway: asked the Secretary of State for the Colonies what steps are taken to publicise the activities and existence of the Resettlement Bureau of his Department.

Mr. Iain Macleod: The existence of the Overseas Service Resettlement Bureau as a valuable source of manpower has, as stated by my predecessor in the House on 11th November, 1958, been brought to the notice of a number of leading industrialists, and articles have appeared in business journals. The Bureau has also been brought to the attention of the regional councils of the Federation of British Industries, the

Associated British Chambers of Commerce, and the regional offices of the Ministry of Labour.

Mr. Chataway: Does not my right hon. Friend think that further efforts should be made to publicise the activities of the Bureau? Is he aware that there is a feeling among many ex-colonial servants that adequate arrangements are not made for their resettlement and that their future employers do not know of the existence of the Bureau?

Mr. Macleod: Yes. I think that we could do more, and I am trying to see how we can do more now. This is an extremely valuable Resettlement Bureau, and I agree that its activities should be more widely known.

Oral Answers to Questions — NORTHERN CAMEROONS

Electoral Register

Mr. R. Edwards: asked the Secretary of State for the Colonies what complaints he has received regarding the electoral register for the Northern Cameroons based on the experiences of the last plebiscite in this area.

Mr. Iain Macleod: None, Sir.

Mr. R. Edwards: Is the Secretary of State aware that very great discontent was expressed in the Northern Cameroons following the last plebiscite, firstly because thousands of Africans were not included in the register because they could not produce tax receipts and, secondly, because not one African woman was included in the register, although half of the population are not Moslems.

Mr. Macleod: The hon. Member's Question asked me what complaints I had received. The Answer to that Question is "None". On the point he has raised, there is to be a new registration this year and women will be included in the plebiscite on the basis of universal suffrage. Therefore, both points raised by the hon. Member are met.

Oral Answers to Questions — CONSUMER PROTECTION

Mr. Dodds: asked the Prime Minister what action he proposes to take to carry out the main recommendation in the Interim Report of the Committee on


Consumer Protection to appoint, without delay, a single Minister to take over the responsibilities now scattered over a number of Departments, in order to safeguard the consumers more effectively than is now possible under the present system.

Mrs. Butler: asked the Prime Minister if he will implement the Interim Report of the Committee on Consumer Protection by appointing a single Minister to take over the responsibility of safeguards for the consumer, Which are now spread over a number of Departments.

The Prime Minister (Mr. Harold Macmillan): I have nothing to add to what I said in reply to Questions on this matter on 24th May.

Mr. Dodds: On 10th May the Leader of the House said that the matter was being considered by Ministers. The right hon. Gentleman said on 24th May that he was working on a principle of giving a decision to one Minister. How long must we wait for the final decision? Is he not aware that there is a feeling that the consumer should be better protected and that this is one matter in which the Prime Minister can make a very big contribution?

The Prime Minister: As I understood the Report of the Committee on which all this hangs, it did not suggest that responsibility for existing legislation should be centralised. What it did go on to recommend was that there should be additional legislation and that, if and when that was passed, the question of centralising the functions—the Committee suggested in the Home Secretary—should be taken up. It therefore hangs upon any new legislation, 'which clearly cannot be introduced in this Session.

Mrs. Butler: Does the Prime, Minister appreciate that the whole tenor of the interim Report was that instead of waiting for accidents to happen a Minister should be designated with responsibility for research, consultation and legislation to prevent them happening? How can the present Minister, with his Departmental responsibilities, possibly give the necessary time and thought to such all-embracing preventive action?

The Prime Minister: But the Report suggested that it should be the Home Secretary who, whether designated,

dedicated or anything else, is a very hard-worked man.

Mr. Gaitskell: Would not the Prime Minister agree that it is rather a dry Answer simply to refer to the fact that legislation cannot be implemented this Session? Is there not a problem now? Is it not the case that, in fact, responsibility for the protection of the consumer is scattered among a number of different Departments? Without raising the question of a Minister exclusively concerned with this, would it not be wise to designate one of the existing Ministers and make him responsible?

The Prime Minister: I am quite ready to designate the Home Secretary, if he is willing to undertake the task, but what the Report said was that the present system by which the work is spread over a number of Departments is quite reasonable, but that if there is any new legislation it would be a good thing to bring it together. Therefore, legislation and centralisation do hang together.

Mrs. Slater: But did not the right hon. Gentleman last week, in reply to me, at least give the impression that he was considering the question of designating a Minister for that work? Does he now retract from the impression he created last week?

The Prime Minister: No. I did my best, naturally, to meet the hon. Lady in any way I could but, as I say, it looks to me as though the poor Home Secretary will have to take on a holiday task.

QUESTIONS TO MINISTERS

Mr. Warbey: On a point of order, Mr. Speaker. It will be within your recollection that during the debate last night my right hon. Friend the Leader of the Opposition intervened to ask the Foreign Secretary a number of questions on the combat readiness alert ordered on Sunday, 15th May, and that the Foreign Secretary said that he could not answer those questions then but that there were a number of Questions on the matter addressed to the Prime Minister for Answer today, and that no doubt the Prime Minister would deal with them today. May I ask you, Sir, whether the Prime Minister has sought your permission to answer Questions 49 and 50 after the normal time?

Mr. Speaker: I am able to inform the hon. Member that the Prime Minister has not done so.

BALLOT FOR NOTICES OF MOTIONS

Wolfenden Report (Part II)

Mr. K. Robinson: I beg to give notice that on Wednesday, 29th June, I shall call attention to Part II of the Wolfenden Report dealing with homosexuality, and move a Resolution.

Leasehold System (South Wales)

Mr. G. Thomas: I beg to give notice that on Wednesday, 29th June, I shall call attention to the trouble caused by the working of the leasehold system in South Wales, and move a Resolution.

Future Forest Policy

Sir H. Studholme: I beg to give notice that on Wednesday, 29th June, I shall call attention to future forest policy, and move a Resolution.

ADJOURNMENT (WHITSUNTIDE)

Motion made, and Question proposed, That this House, at its rising on Friday, do adjourn till Monday, 20th June.—[ Mr. R. A. Butler.]

3.32 p.m.

Mr. Marcus Lipton: I oppose this Motion. As every hon. Member knows, it has been normal in recent years to permit the House an opportunity for a fortnight's Recess at Whitsun. This year that Recess has been unreasonably and unnecessarily extended. That we are adjourning for so long a period means that quite a number of topics, notice of which has been given on the Order Paper, cannot be discussed for lack of time, and perhaps I may be allowed, very briefly, to refer to just a few of them.
First of all, there is the Motion relating to the hours of opening of the British Museum. That Motion refers to a grievance that should be ventilated.
[That this House is of opinion that the weekday closing of the British Museum at 5 p.m. prevents many students from making use of the facilities there available for research and study, especially those of the Reading Room; and calls upon Her Majesty's Government to make such provision as will enable the Trustees to extend substantially the hours of opening throughout the week.]
Then, in order to show my impartiality, I draw attention to the burning desire of a very large number of hon. Members opposite who want private patients to get their drugs at National Health Service prices, and have put down a Motion to that effect.
[That this House, noting that the number of doctors in private practice is rapidly diminishing, is of the opinion that the patients of such doctors should be enabled to obtain their medicines and drugs and have their prescriptions made up on the same terms as apply to National Health Service patients; and urges Her Majesty's Government to introduce the necessary legislation to achieve this.]
There is also a Motion relating to the extension of publicly-owned enterprises to ensure full employment, in which a number of my hon. Friends representing Scottish constituencies are vitally interested.
[That this House, while welcoming the efforts being made to induce development of private industry in areas of high unemployment, believes that where those efforts prove insufficient it is the duty of Her Majesty's Government to bring full employment to those areas by setting up and operating publicly owned enterprises.]
Another topic that many hon. Members, particularly those who represent London constituencies, would like to discuss is the restrictive policy of Her Majesty's Government in relation to local authority housing.
[That this House deplores the present financial policy of Her Majesty's Government, which is seriously slowing down the building of council houses and increasing rents and rates, thus adding still further to the long lists of people waiting for houses and to the difficulties of all local authorities.]
There is also on the Paper a Motion referring to National Insurance benefits and National Assistance scales.
[That this House calls upon Her Majesty's Government to introduce substantial increases in all National Insurance benefits to be financed, in view of the postwar effects of inflation on the value of benefits, by an Exchequer grant; and urges the National Assistance Board to make proposals as soon as possible to bring the assistance scales more closely into line with the increased national income and post-war standards of living, in order to provide more adequately for the needs of retirement pensioners and all who are suffering undue hardship.]
There is a Motion relating to full employment in the North-East.
[That this House, being seriously concerned about the growing unemployment in the North-East following the contraction in the mining industry, shipbuilding industry and ship-repair industry, deplores the failure of Her Majesty's Government to induce private industry to come into the area, and therefore calls upon Her Majesty's Government to set up and operate publicly-owned industries in the North-East so as to ensure full employment.]
There is another Motion dealing with the ill-effects of the credit squeeze upon the North-East.
[That this House views with concern the serious effect of the credit squeeze upon the North-East due to the already high unemployment figures there, and the inevitable increase in unemployment due to the contraction of the mining industry, shipbuilding industry, and ship-repair industry, and therefore calls upon Her Majesty's Government to take all steps necessary to insulate the North-East from the adverse effects of the credit squeeze.]
I conclude by referring to just one other Motion that should be discussed, that relating to a Commonwealth Convention of Human Rights.
[That this House, recalling the solemn obligation undertaken by the United Kingdom and other Commonwealth countries to co-operate with the United Nations by joint and separate action in promoting respect for human rights and fundamental freedoms for all, without distinction of race; welcoming the accession by Her Majesty's Government to the European Convention of Human Rights and its application to Crown Colonies and Protectorates; and recognising that the Commonwealth cannot endure unless all its members recognise and guarantee human rights and fundamental freedoms irrespective of race, colour, or creed, calls upon Her Majesty's Government to initiate the study by all member-countries of the Commonwealth of the practicability of formulating a Commonwealth Convention of Human Rights and the establishment of the necessary investigatory and judicial organs necessary for that high purpose, so that all citizens of the Commonwealth, wherever residing, may be assured of the enjoyment of those fundamental rights and of protection against any infringement of the same.]
If the House were adjourning for the normal fortnight and not for the seventeen days proposed by the Government, at least some of those very important Motions could have been discussed. For those reasons, I oppose the Motion.

3.37 p.m.

Mr. J. Grimond: The programme for next week outlined by the hon. Member for Brixton (Mr. Lipton) must warm the heart of the Leader of the House, and no doubt also warms the hearts of many other hon. Members, but I want to raise one point before we pass this Motion, and that is the need for the Government to


make some statement on the negotiations in Cyprus. I am prevented from going into the merits of those negotiations, but it is common knowledge that they have dragged on for some time. Surely before we rise we should have a statement from the Government about the outstanding points—a statement upon which the Government could be questioned. We should also have from them their view as to how those points should be met.

3.38 p.m.

Mr. William Yates: I should like to support the hon. Member for Orkney and Shetland (Mr. Grimond). Before we go back to our constituencies, or to Ascot or elsewhere, we should have an opportunity to consider the problem of both the Greek and Turkish Cypriots in Cyprus, as well as the position of our Forces, and indeed our responsibilities. After all, Cyprus is a N.A.T.O. base, and it is the headquarters of the Middle East Land Forces.
I should have thought that Her Majesty's Government—which, three weeks ago, said that negotiations were still in progress—would have frankly admitted that the negotiations have broken down and that no negotiations have taken place since. Out of courtesy to the House, and out of courtesy to the interest that we all have in the British community there, I think that the Government should make a statement before we agree to pass this Motion.

3.40 p.m.

Mr. Charles Pannell: I wish to rebut the point of view advanced by my hon. Friend the Member for Brixton (Mr. Lipton). It is all very well for a Member representing a constituency on the doorstep of the House to voice those opinions. My hon. Friend does all right; he can pop out of the House to his constituency and back again without any difficulty. For most of us who represent constituencies a long way off, representation in Parliament is very much a two-way affair. We cannot readily find out exactly what our constituents want unless we go there, and, of course, there are a hundred and one constituency cases to be considered
on the spot. I think we do Parliament a great disservice if we suggest that hon. Members on both sides, who have since

the last election conscientiously attended to their duties, have not earned the degree of respite which they are about to be given.
Life in Parliament is a very hectic business. On most days of the week, I leave my home at about 9 in the morning and I return home at about 11 o'clock at night, and, of course, there is a host of other things which bother me. I have never played down the position of the Member of Parliament. Continually to harp on his position as though he can be put on the clock, clocking in and then clocking off at the end of the day, with just Bank Holidays off, is to denigrate the Member's function.
Our job here cannot be equated with anything else. It is not just a job: it is a vocation, almost an avocation, too. One has to care about it, and I suppose one has to be reasonably dedicated to it if one wants to represent people here at all. The suggestion made, every time that the Adjournment of the House is moved for a week or so, that we ought not to go away to find out what the people want because of a whole host of things which the Leader of the House has not contrived to fit in, is really no argument at all.
What we ought to say is that the job of a Member of Parliament is a full-time job, if he pays attention to it. More than in any other job, a Member of Parliament is as good or as bad as he wants to be. Speaking for myself—I hope that many hon. Members will agree—I believe that we have earned the rest, if rest there is to be. But, of course, it means another kind of work. One cannot give out of oneself more than one is prepared to put in. I challenge any hon. Member to deny that there are a dozen and one documents which he ought to have read but which he has not yet read. One cannot do it while the House is sitting.
There is another point here. The argument that I challenge is usually advanced by people who are praying to God that their Motion will never be carried anyway. I suspect that a very great deal of disappointment would be felt by some hon. Members if they thought that their Motions would be carried.

Mr. Lipton: Fourteen days is enough.

Mr. Pannell: I think that my Division record can bear comparison with most.


But that is not the test. Many people have travelled in various parts of the world in order to bring back a more informed judgment than they would have had if they had stayed in Brixton.

Mr. Lipton: If my hon. Friend will forgive me, I must point out that Brixton is the world and the empire in microcosm.

Mr. Pannell: That irrelevancy was not a legitimate intervention. It was merely an abuse. I have no doubt at all that Members of Parliament are quite right to have a reasonable period in which to go back to their constituencies where they can find out what is happening and what people think, returning here again to bring an informed contribution to our proceedings. I stress again that London is not necessarily the country in these matters.

3.46 p.m.

Mr. E. Shinwell: I am sure that the House will have been profoundly interested in the narrative of his industry given by my hon. Friend the Member for Leeds, West (Mr. C. Pannell). Some may have regarded it as quite superfluous, and some may suspect that sometimes his industry carries him into quarters where, perhaps, he ought not to be discovered. Nevertheless, strange as it may seem, I extend to my hon. Friend 100 per cent. support, though for a different reason.
Let us suppose that the Amendment of my hon. Friend the Member for Brixton (Mr. Lipton) were carried and the House did not go into Recess for the contemplated fortnight or seventeen days, as the case may be. What do hon. Members think would transpire? [An HON. MEMBER: "I shall not come"] My hon. Friend can speak for himself. If I may say so, that was quite gratuitous. I am well aware that it will not happen. But what do hon. Members think would transpire? Does anyone really suppose that we should address ourselves to these important Motions of topical, general and international concern? Of course not. If I thought—I am sure that other hon. Members will share my view—that we should debate matters of profound interest to the nation and the world at large, I should take a different view. But that would not happen at

all. The right hon. Gentleman the Leader of the Opposition would pin our faces to the ground with a lot of footling, meandering legislation. [Laughter.] Did I say "the Leader of the Opposition"? Obviously, I must have my right hon. Friend in mind for some reason or other. I express my regret. Of course, I meant the right hon. Gentleman opposite, the Leader of the House. The other pleasure, no doubt, can be deferred.
I have indicated exactly what would transpire. I recall that not very long ago—my hon. Friend the Member for Leeds, West played a hefty part in the affair—we discussed the question of procedure and speeches were made in all quarters of the House, the purport of which was that we should address ourselves from time to time, if the occasion permitted, to matters of wide interest, extending the scope of our debates. Of course, that has not happened. Indeed, now that hon. Members are assumed to take advantage of the Ballot for Notices of Motions, what do we find? They raise matters, not of profound interest, but of individual concern. My hon. Friend the Member for St. Pancras, North (Mr. K. Robinson)—he does not happen to be here at the moment—who gained a victory in the Ballot this afternoon, decided to raise the subject of homosexuality. I have no doubt that it is a matter which concerns a vast number of people. I beg to be excused. This is not the occasion to indulge in a confession that my taste lies in quite the opposition direction.
Really, are we serious about this business? I agree that sometimes the Recess is prolonged unnecessarily.

Mr. Lipton: Mr. Lipton rose—

Mr. Shinwell: My hon. Friend should not bother now, because he has nothing very important to interject, anyhow. Perhaps I may exercise a little intelligent anticipation in that respect.
Speaking quite earnestly, I feel sometimes, after quite long experience in the House, that, although I should not say we waste our time—I agree entirely with what my hon. Friend the Member for Leeds, West says about what hon. Members are compelled to do—we cannot help but waste time. We are not expected to be in the Chamber all the time to listen to some of these awful


orations. That would be asking too much. We have enough to bear, with our customary fortitude, without having to endure that sort of thing.
There is the correspondence. Some of us have to write, and some people have something to do outside. I confine myself to this institution for the purpose of keeping my head above water. Other hon. Members are not in that position. Ought we not to be addressing ourselves from time to time, as an earnest assembly concerned with the well-being not only of our own community but of people in the Colonies and Commonwealth and other countries of the world, to vital topics of profound interest? We are not doing that. I beg the Leader of the House to try to find Government time occasionally, or perhaps through the usual channels, so that we can discuss these important topics. Do not let us waste time about this.
I mentioned the other day, at a meeting of the Inter-Parliamentary Union, that I had seen in a report of the United Kingdom branch that one of our delegations discovered that it could not visit a certain Assembly because its Government had decreed that it go into Recess for twelve months. I am not suggesting that we should follow that example. Perhaps two weeks is not too long a period. We can meditate, reflect, ruminate and hibernate—whatever one likes to call it—but we should be able at the end of that period to come back refreshed to take part in our proceedings.
For the moment, I beg my hon. Friend not to press his Amendment or Motion. Let us go away for a fortnight, glad to get away for the time being, and proclaim it from the house-tops, and tell our constituents that from time to time we require to be relieved from the pre-sure exerted on us by the Government. I hope that my hon. Friends will not succumb to the blandishments of my hon. Friend the Member for Brixton.

3.53 p.m.

Mr. Sydney Silverman: My right hon. Friend the Member for Easington (Mr. Shinwell) has made a very witty and attractive speech, as he always does. He is quite right to claim that he has a very long experience in the House of Commons. My own is not short, but his is much longer. I think that if he were to examine his personal record over the years he would

find a number of occasions on which he made exactly the kind of speech, with exactly the same purpose, as my hon. Friend the Member for Brixton (Mr. Lipton). I can remember one or two of them, but I will not seek to embarrass him by quoting them.
I would point out to my right hon. Friend that my hon. Friend the Member for Brixton has not moved anything, neither Motion nor Amendment. It was the right hon. Gentleman the Leader of the House who moved the Motion. All that my hon. Friend is doing is to oppose it. I am sure that my right hon. Friend would be the first to defend my hon. Friend's right to say to the Government exactly why he thinks that we ought not to accept the Motion.
The Motion which the Leader of the House has moved is not the usual Motion. If he had moved the ordinary, traditional Motion for a fortnight's Recess at Whitsuntide. I do not know what my hon. Friend would have done about it, but I certainly would not have opposed it. I agree with my hon. Friend the Member for Leeds, West (Mr. C. Pannell) that we should all be very bad Members of Parliament if we spent the whole of our time in this Chamber. I think that there should be reasonable opportunities not merely for relaxation but for journeys, study and obtaining information, so that we come back prepared to do our part in the House of Commons with at least as much general information as the ordinary lay citizen would have. I am all for that.
I say to my hon. Friend the Member for Leeds, West that he, too, was unfair to my hon. Friend, because he did not take into account that the whole point of my hon. Friend's intervention was not to object to the ordinary Whitsuntide vacation but to the proposal which lengthens it at a time when there is so much else that we ought to be doing. I feel sure that, on reflection, both my hon. and right hon. Friends will see reason and support the line which my hon. Friend has taken.
A number of subjects have been mentioned that we might discuss and which we are not likely to have an early opportunity of discussing because the Adjournment is so long. I would dissent from another thing which my right hon. Friend the Member for Easington said. He


may not be interested in the subject which one of my hon. Friends chose when he was lucky in the Ballot, but I would earnestly appeal to him not to be flippant about it. This is a subject which disturbs the minds of a great many people.

Mr. Ellis Smith: There are many other subjects.

Mr. Silverman: I will come to that in a minute. I am not interested in that subject either, but it is true that the Government appointed a high-powered Commission to investigate it. That Commission came back with a Report and made recommendations. The House of Commons has never yet had an opportunity to reject its recommendations if it does not like them or assent to them if it does.
The subject which causes me to say that I think we need a shorter Recess, in order to come back to it, is that of yesterday's debate. I cannot see how anyone with a sense of responsibility can regard yesterday's debate as adequate, having regard to the issues which were raised or the grievous and perilous situation in which the world finds itself. I will not go into the merits of that now, because I should be out of order if I did so, and this is not the time to do so. My right hon. Friend the Leader of the Opposition, in the course of an admirable speech, asked a number of most important questions. The Foreign Secretary did not answer them. Nobody has answered them. If there were no other reason for reopening that debate, that in itself would be sufficient.
There is one other matter that I want to raise, but I am on rather more delicate ground in doing so because, if it were misinterpreted, it might sound like a criticism of Mr. Speaker, which I have no intention of making. The selection of speakers is for Mr. Speaker and for him alone. He is limited by the short time that inevitably is left, when Front Benchers on both sides finish speaking, to the rest of us. If the result of that is objectionable, it is not the fault of Mr. Speaker; but even if it is no fault of his, it is the fault of the House if it takes extra time on vacation rather than allowing a little of that extra time to repair these inadequacies. So far as yesterday's debate is concerned, on this

side of the House the real issues were never brought out at all. Only one speaker who was not a right hon. Gentleman, or at some time or other a spokesman of the Front Bench, was called on this side of the House. That was the hon. Member for Birmingham, Ladywood (Mr. V. Yates) who, from his point of view, made an excellent speech. He was the only hon. Member called on this side of the House who was not either speaking from the Front Bench yesterday or who does not speak at other times on other subjects from the Front Bench.
It has been suggested that some hon. Members spend much of their Parliamentary time jumping from the rear benches to the Front Benches, so that they can speak officially from the Front Bench on some subjects and, when they want to exercise their rights on another subject, slip back to the back benches, but they somehow manage to be called just the same.
The result is that there goes out to the world a wholly false picture of what this House really thought about the issues debated yesterday. It is not right that it should be so. I repeat that I am not blaming anybody. I am only saying that these three extra days which the Government are asking us to add to the Recess need not be added to it. Let us do three days' work this time, as we have done year after year for so many years past, and let us devote one of them, at any rate, to repairing the inadequacies of yesterday's woefully unrepresentative debate.

4.0 p.m.

Mr. Hector Hughes: I hesitate to impose myself on the House, but I want to make a few brief observations. My hon. Friend the Member for Brixton (Mr. Lipton) is one of those who seem to think that a Member of Parliament should spend all of his time in the House. He overlooks the fact that the duties of a Member of Parliament include seeing his constituents, finding out what they require and making himself conversant with their needs in general. He fails to realise that a Member of Parliament is much like a parish minister who has pastoral duties to interview his constituents and to help them with their difficulties. That is one of the things that can be and is


done during Recesses such as the one we are discussing.
There is another point that I should like to make in reply to my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman). The reason time cannot be found for the subjects which have been mentioned for discussion is due to two things—first, the bad organisation of time on the part of the Government, and notably the Leader of the House, and secondly, the fact that some of the speeches, indeed most of the speeches, are far too long. I suggest that a way should be found of inducing Members to put their points clearly and simply, as I am doing now.
The third point that I wish to make is that no regard is paid by those who oppose the Motion to the fact that we are in the middle of very fine weather. Those who, like myself, represent constituencies as beautiful as the constituency of Aberdeen, with its wonderful beach, welcome the opportunity of some relaxation by swimming in the sea.
I think that those are three very good reasons why the Motion should be passed. I support it, and I hope that the House will give its Members the opportunity to enjoy Whitsuntide and to use it in the way that I have adumbrated.

4.3 p.m.

The Secretary of State for the Home Department (Mr. R. A. Butler): I think that it would be courteous of me to make a short reply to the very important points raised by hon. Members. As has been said, the hon. Member for Brixton (Mr. Lipton) has moved nothing. He moved no Amendment, and I doubt whether he moved anybody. His speech was based on a complete misapprehension. He said that the Recess had been unnecessarily extended. In fact, if he studied the records he would see that, whereas on this occasion we are having sixteen clear days, from 1956 to 1959 we had seventeen clear days, in 1953 seventeen clear days, and in 1950 and 1951, under the Opposition's temporary administration of the country, seventeen clear days. We are, therefore, reducing the quite normal period of the Whitsun Recess, apart from 1955, from seventeen to sixteen days.
The hon. Member illuminated his argument with parrot-like cries, saying that the Recess should be fourteen days. Does

he imagine that we should move the Adjournment next Friday, and that we should come back on Friday night or Saturday morning and sit on Saturday morning after fourteen days instead of returning on the Monday as we have now arranged?

Mr. Lipton: I put forward that suggestion merely because the right hon. Gentleman himself said on 26th May:
It has been normal in recent years to permit the House of Commons an opportunity for a fortnight's Recess at Whitsun—"[OFFICIAL REPORT, 26th May, 1960; Vol. 624, c. 681.]
I was merely repeating the right hon. Gentleman's words. Now I am being blamed for it.

Mr. Butler: The hon. Gentleman said that the Recess should be reduced from sixteen to fourteen days. That would take us up to Saturday fortnight. I do not recommend that the House should accept a proposal that we should resume on the Saturday rather than the Monday. We are cutting down the seventeen days given on previous occasions almost consecutively since 1950 to sixteen days so as to meet again on the Monday. We are doing that simply because we want to proceed with Government business. Although we may not be able to deal with the seven or eight subjects referred to by the hon. Member for Brixton, it at least means that we shall return to our duties on the Monday rather than on the Tuesday. To that extent, that is an answer to the hon. Member for Nelson and Colne (Mr. S. Silverman). We are not extending the Recess, but, compared with precedent, shortening it by one day.
The hon. Member for Orkney and Shetland (Mr. Grimond) raised a serious matter, the subject of a statement on Cyprus, and was supported by my hon. Friend the Member for The Wrekin (Mr. W. Yates). I am perfectly ready to discuss this matter with my right hon. Friend principally concerned. The negotiations have not broken down, as has been stated. For the moment they are suspended, but I see no reason to suppose that we need be unduly pessimistic, nor that this is a reason for altering acceptance of the Motion by the House. If there is occasion for a statement which will be valuable, we shall certainly pay attention to the hon. Member's request. I hope that he will withdraw his opposition to the Motion.


The hon. Member for Leeds, West (Mr. C. Pannell) differs in his reasons for the Recess from the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes). The hon. and learned Member for Aberdeen, North wishes to remain perpetually at sea, while the hon. Member for Leeds, West wishes to revert to his normal Parliamentary duties in his constituency I hope that we shall have a combination of both—a bit of recreation for hon. Members and a bit of constituency work. I am sure that this is vital to the conduct of Parliament.
I should now like to deal with the points raised by the right hon. Member for Easington (Mr. Shinwell). We have no intention of adjourning the House for twelve months or of introducing any form of dictator activity. We live by the House of Commons and with the House of Commons. We are refreshed by it and restored in our feelings by the right hon. Gentleman's views and by those of other hon. Members. The right hon. Gentleman, by mistake this time, attacked his right hon. Friend the Leader of the Opposition for footling and meandering in any future legislation he may be called upon to bring in. By a sleight of hand he has fallen upon his normal practice of disagreement with his normal chief.
I think that that is all that I need say, except to refer to the serious argumentation of the hon. Member for Nelson and Colne. He thought that yesterday's debate was not adequate. That may be the view of the hon. Member, but it is a matter of opinion. I think that it would be difficult in any debate, if there is an approximation of views on foreign policy, which I thing is patriotic and important at present, to reveal the same excitement of discussion as when we are attacking one another. That may be one reason why the hon. Member was disappointed by the tone and level of yesterday's debate.

Mr. S. Silverman: Is the right hon. Gentleman seriously saying to the House of Commons that, When the House is debating one of the most fundamental questions it can ever debate in circumstances which are perhaps more critical than at any other time in human history, if there are people with genuinely differing points of view, subject to the

common object of preserving the peace of the world, it becomes a patriotic duty and a proper activity of the House of Commons to suppress those views?

Mr. Butler: No, Sir. I was saying quite the opposite. In a debate in which there is, as Mr. Speaker FitzRoy used to say, the cut and thrust of argument and a degree of violent opposition, there are always more animated expressions and usually more animated argument. On this occasion, there was a deliberate speech by my right hon. Friend the Prime Minister in which he indicated that this reverse did not occasion a change in British policy. I think that that is not only sensible but sage and sound at present. The Leader of the Opposition indicated that he agreed in general with the line being taken, and he asked several questions. It was an unfortunate coincidence that, owing to the pressure of Colonial Office Questions, some of the Answers which my right hon. Friend might have given today could not be given. That is an unfortunate coincidence and casualty of our House of Commons procedure. It does not mean that this is an occasion for stopping the Adjournment of the House or for accepting opposition to the Motion.
I sympathise with any hon. Member who is anxious about the state of the international situation—it is the gravest, possibly, that this House has ever met —but I do not think that, with the general outlook of several months ahead which all experts in foreign policy agree is inevitable, by giving ourselves a fortnight's respite from our own company we shall be any the less good counsellors when we return again to deal with the situation. I therefore consider it right that we should take this fortnight's respite and that the Motion should be carried.

4.12 p.m.

Mr. William Warbey: The right hon. Gentleman should clarify what he has just said about the nature of yesterday's debate. To me, it was an extraordinary and disturbing statement. I understood the right hon. Gentleman to say that yesterday's debate was not regarded—by whom I do not know, but it was not regarded by some right hon. and hon. Members—as an occasion on which there would be the usual conflict between the two sides, the usual cut and


thrust of debate, and the usual expression of controversy and disagreement. Yesterday, apparently, was an occasion on which it was regarded by those right hon. and hon. Members that we should all be assembled in a patriotic mood of agreement with one another and with the Government.
If that is what the right hon. Gentleman meant to convey, is he going on to say that the speakers who took part in the debate were contributing to the demonstration of national unity behind the Government? Is he suggesting that they were called with that purpose in mind? [HON. MEMBERS: "No"] I do not wish to say anything, Mr. Speaker, that would reflect upon your choice of speakers, but when the right hon. Gentleman has made this extraordinary and disturbing statement about the character of the debate, we should have an indication of exactly what was implied by that statement, and we should know which debates in future are to be regarded as arranged in order to make patriotic displays and which are arranged for the conduct of our business—

Mr. Bernard Braine: Shocking.

Mr. Warbey: —so that the Opposition may know when it may condemn the sorry record of the Government.

4.15 p.m.

Mr. R. A. Butler: I do not have much to add to what the hon. Member for Ashfield (Mr. Warbey) has contributed. The choice of speakers must be entirely a matter for the discretion of the Chair, and I have no intention of commenting on that. With regard to the rest of the hon. Member's remarks, I am well satisfied that what I have said is correct. Yesterday may have been regarded by some as a quiet debate. It may have been regarded as some as inadequate to the general horror which faces the world. That is a legitimate point of view. I was only making the point that on an occasion when people are awed by the circumstances of the international situation, it is not, perhaps, surprising that the debate should be quieter than on other occasions when we feel that we can be more irresponsible and can give greater vent to our feelings.
In justice to the hon. Member, I go so far as to say that, after a period of

reflection, it may well be that a more profound debate could be held in the House on the impact of recent events than could be held so soon after them. If so, that is all the more reason why we should be given time to think. I should be the first to wish that the House of Commons should rise to the severity and grandeur of these occasions.

4.18 p.m.

Mr. Stephen Swingler: The Leader of the House has admitted that it was unfortunate that, at the end of the debate yesterday, certain important questions that had been raised were not answered. The Foreign Secretary said that he would not answer them because his right hon. Friend the Prime Minister would answer them today. Unfortunately, at Question Time today, these issues were not reached. It may well be that on Thursday, the last opportunity for what will be virtually three weeks, the Questions will either not be on the Order Paper or, again, will not be reached. Will the Leader of the House undertake to ensure that before the House adjourns in accordance with the Motion, a statement, either by the Foreign Secretary or by the Prime Minister, will be made so that these Questions are answered and the Members interested, including my right hon. Friend the Leader of the Opposition, who raised some of them, will have an opportunity of asking supplementary questions?

4.19 p.m.

Mr. R. A. Butler: That is a legitimate question. What happened today was a sheer accident. My right hon. Friend the Prime Minister had the Answers, but the Questions were not reached. That is the simple fact. I cannot talk to my right hon. and learned Friend the Foreign Secretary, because he will be abroad until, I think, the House rises, doing his duty in America, but I will certainly talk to my right hon. Friend the Prime Minister. I know that it would be his wish that, if the Questions were reached, he should answer them. In the event of that not seeming likely, I can discuss with my right hon. Friend the point raised by the hon. Member.

Question put and agreed to.

Resolved,
That this House, at its rising on Friday, do adjourn till Monday, 20th June.

BUSINESS OF THE HOUSE

Resolved,
That on Friday, 24th June, unofficial Members' Business shall have precedence of Government Business and Notices of Motions shall have precedence of the Orders of the Day and the Notices of Motions given by the hon. Member for Twickenham, Leicester, North-West, and Folkestone and Hythe, respectively, which stood in the Order Book for Friday, 6th May shall have precedence of any other Notices of Motions in the same order in which they stood for that day.—[ Mr. R. A. Butler.]

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 26th May].

[Sir GORDON TOUCHE in the Chair]

Clause 42.—(NOTICE OF LIABILITY TO TAX.)

Amendment proposed: In page 37, line 32, leave out "fifty" and insert "one hundred".—[ Mr. Mitchison.]

Question again proposed, That "fifty" stand part of the Clause.

4.20 p.m.

Mr. Douglas Houghton: Late on Thursday night, the Attorney-General made a comprehensive statement on the new penalties in Part III of the Bill. After I made a brief comment on some aspects of the new proposals, we left the matter over until today, each of us, no doubt, reflecting on the points that had been raised.
It is a pity that the Chancellor of the Exchequer did not appoint a Committee to review the penalties as was suggested by the Royal Commission on Income Tax. That would have given us the opportunity of studying not only new proposals, whatever they might have been, but the reasons for them and, possibly, reading evidence in connection with them. As it is, we knew nothing of the new proposals until the Second Reading of the Bill and we have had to plough our way through some complicated Clauses to find out, not only what they mean, but also the general approach to the proposed new scale of penalties.
Secondly, we are grateful to the Chancellor of the Exchequer for having provided the Opposition with a schedule of the penalties in the Income Tax Acts and what is to happen to them under the new proposals. If we could have more of that kind of assistance in our debates, it would make for speed and remove misunderstanding.
We are discussing, together with the Amendment in page 37, line 32, the following Amendments: in Clause 44, page 39, line 25, leave out "fifty" and insert "one hundred"; in page 39, line 26, leave out "twice" and insert "three times"; in Clause 45, page 40, line 3,


at the beginning insert "twice"; in Clause 47, page 40, line 44, leave out "five hundred" and insert "one thousand"; in Schedule 6, page 73, line 23, leave out "fifty" and insert "one hundred"; in page 73, line 24, leave out "twice" and insert "three times"; in page 73, line 32, at the beginning, insert "twice".
These Amendments fall into four classes: the penalty for failure to notify liability to tax—Clause 42; the Clause dealing with penalties for fraud—Clause 44; the Clause dealing with penalties for negligence—Clause 45; and for aiding and abetting fraudulent practices—Clause 47.
The keynote of the Attorney-General's speech was that the new scale of penalties had been fixed in keeping with customary practice over many years. In other words, although the Inland Revenue had very high maximum penalties in its hands, in practice they were very much lower. In general they were so comparatively lenient that the new penalties are about their equivalent. It seems to me that that cannot apply to the penalty in Clause 42, because when I asked on 17th May how many penalties have been imposed in the last ten years in cases of failure to notify liability to tax, the Chancellor of the Exchequer said that there was no record, which I found rather surprising, because Clause 42 substitutes Section 18 of the Income Tax Act, 1952.
The existing penalty for failure to notify liability to tax is £20 plus three times the tax that ought to have been charged. The penalty now proposed is £50. The question is whether that is enough. In general this Clause applies to people in business, private traders and individual trading activities of one kind or another, where the persons concerned fail to notify the Inland Revenue that they are liable to tax. For the most part, those in employment have been caged in by P.A.Y.E. In these days it is very difficult for anyone to take a job and escape tax His employer is under obligation to tax at source under P.A.Y.E. He wants to know the employee's code number. There is a form which the employee takes from one employer to another, so the network of taxation is complete in the movements of the worker himself,

There is another very salutary provision which was introduced by my right hon. Friend the Leader of the Opposition when he was Chancellor of the Exchequer. This gives the Inland Revenue power to call on banks and other persons paying interest without deduction of tax over the amount of £15. The Committee must know that several hundreds of thousands of taxpayers were caught by the check that was put upon them by the Finance Act, 1951. In those two respects, therefore, the Inland Revenue has adequate sources of information, and on the whole to have adequate sources of information is to be chosen rather than the opportunity of catching out the taxpayer and imposing heavy penalties upon him.
I am not at all sure, however, that the information services of the Inland Revenue are as good as they ought to be in this aspect of trading activity. It seems possible for people to go on for quite a long time before the Inland Revenue gets to hear of them. Apparently, under Clause 42, when they are discovered the maximum penalty for them will be that the tax which they have not paid will be recovered, plus interest, because it will be due to their own fault if the tax has remained unpaid, plus an overall penalty not exceeding £50. That penalty seems pretty low for going five, six, seven or eight years without discovery.
I had a surprising experience the other day. I received a printed paper from the inspector of taxes, addressed to me at the block of flats where I live, asking me whether I had made a tax return and, if so, where I had sent it. I was a little upset, because I had lived in this block of flats for ten years and it seemed to me strange that the Inland Revenue had not heard of me. I was almost on the point of ringing on the house telephone to ask the Chancellor of the Exchequer, who lives in the same block of flats, whether he had been asked where he had made his last return.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I have been there only five years.

Mr. Houghton: The right hon. Gentleman has something coming to him, then, in a few years' time.
It is clear that what was happening was that the Inland Revenue was going through the list of residents in that block of flats to see whether they were making their returns and whether they were being properly cared for. But I might have been a pensions consultant or an ice-cream vendor or a newsvendor. There were numerous occupations which I might have been following in the last ten years which the Inland Revenue would probably never have heard of until it found where I lived and asked what I was doing. After that experience, can one be certain that taxpayers who are negligent in this respect will be caught by the Inland Revenue? I suggest that something more salutary than a penalty not exceeding £50 is justified in these cases.
The next significant penalty is in Clause 44 for fraudulent returns, followed in Clause 45 by penalties for negligently making incorrect returns. The Attorney-General said on Thursday night that the maximum penalties in the hands of the Inland Revenue up to now have been so high that it had not been necessary hitherto to distinguish in the definition of penalties between negligence and fraud, but under the new scale it is now necessary to do so. The question is whether the difference between fraud and negligence is enough.
I find the Attorney-General's speech in this respect a little difficult to follow. If the right hon. and learned Gentleman will look at the third complete paragraph from the beginning of col. 834 of the OFFICIAL REPORT for 26th May, he will see the words:
I ought to have made it clear …"— [OFFICIAL REPORT, 26th May, 1960; Vol. 624, c. 834.]
But he will find it a little involved. I have not yet sorted it out, but whatever the right hon. and learned Gentleman said there, I think that what he meant was that the penalty for fraud must be higher but not perhaps very much higher than the penalty for negligence because of the difficulty of distinguishing between the two. Some negligence borders on fraud and some fraud is very hard to prove. Indeed, if it were not hard to prove, probably proceedings would be taken, but the difference between the two

is not very great, and I think that the difference should be wider than it is.
I quote the example of a taxpayer who returns his Post Office Savings Bank interest at £10 when he actually receives £50. We will say that he did that not with intent to defraud the Revenue, but just carelessly—he had not looked it up, or had forgotten a deposit account which he had inherited from a relative, or something like that. He was not in the frame of mind when he was out to deceive and defraud the Revenue. We will say that that was negligence.
4.30 p.m.
Then let us assume that the Inland Revenue discovers that the interest was £50. The taxpayer is usually asked to confirm or comment upon the amount which he has already returned in these circumstances. If the taxpayer confirms that the interest is £10, I am not very clear about whether that confirmation of a negligent statement amounts to wilful neglect or to fraud. Perhaps those are degrees of evil intent, but the two are getting very close together.
I sometimes wonder whether it is desirable to continue the present practice of not disclosing to the taxpayer the source of the information. If the Inland Revenue has information through the exercise of a statutory provision—and a bank is required by law to tell the Inland Revenue of the name and address of a person who has received or been credited with more than £15 interest—I do not see why the Inland Revenue should not say that it has received information from such-and-such a bank, or some other source, to the effect that a taxpayer has received a certain amount of interest and that his return does not show it, or shows it as being so much less.
Would not that be a straightforward way of tackling the taxpayer? I know that it is said that perhaps the taxpayer will have concealed some other things and might disclose, not the information that the Inland Revenue has, but something which it does not have, so getting himself further into difficulty. I do not approve of that. There should be a straight disclosure to the taxpayer when information is received in proper form under the statutory requirement.
However, to continue our little story; let us suppose that the taxpayer returns


£10 when it should have been £50. The Inland Revenue asks the taxpayer to refresh his memory, or make some other suitable and tactful approach, just to unsettle him, and he replies that he confirms the figure of £10. The Inland Revenue, obviouly, then gets a little more forthright and the taxpayer is asked to explain himself. In those circumstances, if the Inland Revenue thinks that he is guilty of negligence, but not of fraud, the total penalties which can be exacted would be £65 10s. and would be £81 in the case of fraud, in both cases plus the amount of tax lost, which, at the Standard Rate would be £15 10s.
Is the Attorney-General satisfied with the difference between those two sets of penalties, for negligence and fraud, having regard to the possible difference in the degree of negligence or fraudulent intent or the part of the taxpayer? That is one of the things which the Chancellor should consider. Our proposal is that the penalty in the case of fraud should be £100, instead of £50, and three times the amount of tax lost, instead of twice the amount. Our proposal in the case of negligence is to increase the amount of penalty from the single amount of the tax lost to twice the amount of the tax lost. That would stiffen the penalties in both respects and make them sharper than they are now.
In this connection, the Chancellor should consider the difference in treatment between the person against whom fraud can be proved and the person against whom fraud cannot be proved, even though the circumstantial evidence is very strong. On the whole, the taxpayer who claims for a child he has not got, or a wife he has not got, finds himself in prison. There is no escape for him. He cannot pretend that he had forgotten, or that he could not remember, or that he was in such a fuddle with his affairs that he did not know what he was doing. No such plea would be accepted by the court.
But where the taxpayer has understated his income very substantially and has probably persisted in doing so for some time and there is considerable evidence to suggest that he was out to diddle the Inland Revenue, he could plead that he was busy, or distraught with anxiety, that his affairs were in a mess, that he had not had time to make up his books, that he had put down the

best figure he could. I have a case in mind in which evidence of confusion of affairs and confusion of mind got the taxpayer off in the end, whereas another taxpayer of the kind I have mentioned would find himself in the dock.
It is no good the Inland Revenue mounting prosecutions which will fail. It must obviously consider these cases very carefully before taking proceedings, but I am sure that there are many cases in which proceedings would be justified if there were a little more evidence to secure conviction. Most fraud cases of that type are dealt with by money penalties and these are the money penalties which will apply to them. We think that they are on the low side.
In the group of Amendments which we are discussing, there is an Amendment to Clause 47 dealing with aiding and abetting. This covers a penalty for a person who knowingly aids, abets, assists, and so on, another person to deliver incorrect accounts, or declarations, in connection with Income Tax. The penalty of £500 is the sum recommended by the Codification Committee in 1936. We think that it should he £1,000. After all, it is a very serious crime for a person to assist someone else to diddle the Inland Revenue. It is usually someone who ought to know better. It is usually someone who knows what he is doing and who is prepared to take certain risks, probably in the interest of his client if he is a professional man, or for some purpose which should be sharply punished when cases of this kind are discovered.
On the whole, while we agree with the general pattern of the new penalties, we think that in those respects they are on the lenient side. To summarise, we think that the penalties for failure to notify, in Clause 42, for fraud, in Clause 44, for negligence, in Clause 45, and for aiding and abetting, in Clause 47, should be increased.

The Attorney-General (Sir Reginald Manningham-Buller): The hon. Member for Sowerby (Mr. Houghton) began his speech by regretting that my right hon. Friend the Chancellor of the Exchequer had not appointed a committee which would have reported on these proposals and whose report would have been considered by the House of Commons before


our debate. I quite appreciate the difficulties which there may have been in understanding the basis of the penalty provisions, but if we had had such a committee it would not have been possible to make the changes, which the hon. Member regards as generally desirable, in this Finance Bill. I have endeavoured, now on two occasions, to give a broad review of the basis from which we have approached the subject.
On Thursday night, the hon. Gentleman very kindly gave us notice of his reasons for the Amendments, reasons which he has amplified today. Last Thursday, I endeavoured to help the Committee by giving a general outline of the penalty provisions, without dealing in detail with the Amendments. I would like now to deal with the Amendments in detail in the same order as the hon. Gentleman dealt with them.
There came first his criticism of the £50 penalty imposed by Clause 42 for failure to give notice of liability to tax. The hon. Gentleman proposed that that penalty should be increased to £100. Under the present law, as the hon. Gentleman said, the penalty under Section 18 of the Income Tax Act, 1952, for failure to give notice of liability, is £20 and treble the tax which should be charged. That is the same penalty as is fixed by Section 25 (3) for failure, among other things, to make a return. At first sight, it seems not unreasonable that one should keep the same relation between the penalties for the two offences.
The basic penalty in Clause 43 for failure to make a return is £50, plus a continuing penalty. Here I would like to correct something which I said on Thursday night. I apologise for saying it. By condensing what I had to say I slipped into error in suggesting that Clause 43 (1) did not apply to returns of one's own income. It does, and Clause 43 (2) provides for a much increased penalty of £50 and the total amount of unassessed tax if the failure continues after the end of the year of assessment following that during which the notice was served and is in relation to one's own income.
The figure of £50 in Clause 42 was thought, to be right because the basic penalty in Clause 43, for failure to render a return, is also fixed at £50 initially. I

can justify that When we get to it if any questions are raised about it.
In the light of what the hon. Gentleman said last Thursday, we have given very serious consideration to this matter and we feel that, for the reasons which he has eloquently expressed today and others, there is a case for a somewhat higher penalty in Clause 42 than that now proposed and than the basic penalty for failure to make a return when called upon. In the latter case, the Revenue knows of the failure and can pursue the taxpayer, but in the former case the Revenue may be wholly unaware of the taxpayer's liability to tax. It could be argued that the maximum penalty in that case should be sufficiently large to form an adequate deterrent, and we are, on reflection, consequently prepared to accept the hon. Gentleman's Amendment to Clause 42 to increase the present penalty of £50 to £100 for failure to give notice of liability to tax.
The penalty for failure, whether in relation to liability to Income Tax or Surtax, will be a maximum penalty. On reflection, we think that it is a desirable improvement to give this greater scope to the courts when fixing penalties and also to provide a more powerful deterrent to prevent people from failing to give notice of liability to tax.
Having said that, I am sorry to have to disappoint right hon. and hon. Gentlemen opposite about the other Amendments. However, we do not consider that a case has been made out for them. I am sorry if one sentence which I used last Thursday has proved difficult to understand. I was alarmed when I read it the first time myself in case I had put it wrong, but, having read it a second time, I do not not think that I did. We started our approach to this matter, bearing in mind that the Revenue would get back the tax plus interest, by considering what would be the right yardstick for the maximum penalty for negligence.
4.45 p.m.
We took into account the scale of penalties imposed by the Revenue under the present practice, in addition to the collection of back duty. We found that under the proposals of the Bill the ceiling would be a little higher than under present practice. We therefore see no ground for suggesting that the penalty


for negligence as proposed by the Bill is likely to be inadequate. That is the considered view of the Revenue authorities, and I should be reluctant to dissent from them in that view, in the light of their experience over many years.
What I said last Thursday was that we worked on the basis that the ceiling in respect of negligence ought not to be much greater than the penalty which would be sought by the Revenue in the worst cases in which fraud could not be proved. We could get a case where we could not establish fraud but which was akin to fraud and was, therefore, a bad case, and we have fixed the ceiling at a figure which will enable the present practice to be continued in relation to that type of case.
In the case of fraud we have doubled the penalty that can be imposed, to £50 and twice the amount of the difference. There again, it is the view of the Revenue that that is adequate. The hon. Member proposes that it should be increased from £50 to £100 and from twice to three times the amount of tax omitted, but bearing in mind the fact that if there is fraud the taxpayer will have to pay the tax lost together with the interest on it, and be liable to pay £50 and twice the amount of tax omitted, and also that if there is fraud in more than one return proceedings may be brought in relation to each return—since there is no time limit for assessment—and penalty proceedings can be taken within three years of the assessment becoming final, we feel that ample margin is provided, where there has been a long course of fraud, for the institution of sufficient penalty proceedings to enable proper punishment to be imposed. That is the basis upon which we have arrived at our conclusion.

Mr. Hector Hughes: I am reluctant to interrupt the right hon. and learned Gentleman's flow of eloquent and pursuasive argument, but he is missing one point. These are enabling Clauses, dealing with penalties not exceeding a certain amount. The right hon. and learned Gentleman asked, "What is the right penalty?" Surely these Clauses do not deal with that question; they deal with penalties not exceeding a certain amount. What is the objection to giving the Crown more power to impose higher penalties?

The Attorney-General: I am glad the hon. and learned Member has appreciated that under the Bill all the penalties proposed by these Clauses are maxima. That is one of the great improvements which have been made. If the appeal is taken to the courts it is for the courts to determine. Discretion is given to the courts in the matter. Further, where proceedings are taken before the Commissioners it is open to the taxpayer to go before the courts and appeal against the penalty imposed. We are concerned here only with maxima, and I am sure that the hon. and learned Member will welcome that as a great improvement.
The question arises: what are the right maxima? We do not wish to fix unnecessarily high maxima, and for the reasons that I have given, subject to the Amendment that we are prepared to accept, we agree with the Revenue that in the case of fraud, under Clause 44, and negligence under Clause 45, higher maxima will not be required than those which are now prescribed.
With regard to Clause 47, which deals with aiding and abetting in the making of incorrect returns, the hon. Member for Sowerby proposes that the penalty should be increased from £500 to £1,000. We agree with the Revenue that that is not necessary. The existing penalty is seldom invoked. Those who assist taxpayers to make returns are usually accountants, and where accountants knowingly assist in making fraudulent returns the right course is not to proceed under Clause 47 but to prosecute. I find it difficult to envisage a case in which accountants knowingly assist in making an incorrect return which does not amount to fraud, but if such a case did arise, in our view the present penalty of £500 would suffice.
I hope that I have dealt with the points raised by the hon. Member. I am grateful to him for the way in which he has helped me to perform my task of explaining our reasons for these provisions and for the maxima fixed in the Bill. For the reasons that I have given we feel that the difference between fraud and negligence is already given sufficient weight under the Bill.
The hon. Member touched upon the desirability of what he called a straight disclosure to the taxpayer where information is obtained as a result of


the exercise of the Revenue's statutory power. It has certain attractions, but it would have the disadvantage that if other information was being used by the Revenue it would reveal that that other information came from informants whose names were not disclosed. But it is an interesting suggestion.
The hon. Member went a little wrong in his lanaguage at one point. He said that if the Revenue authorities think a person is guilty of fraud they can impose one penalty and if they think that he is guilty of negligence they can impose another penalty. It is easy to express the situation in that way, but it is not for the Revenue to decide whether fraud is established, and the same consideration apples in respect of negligence. One of the major improvements made in the penalty provisions is the right now conferred upon the courts to decide what is the right penalty, and another is the right given to the taxpayer, after proceedings before the Commissioners, to appeal to the courts if he feels disposed to do so.
We have spent some time in discussing these provisions. I have done the best I can to assist the Committee, and it would help a great deal if we now proceeded without much further discussion to other matters.

Mr. G. R. Mitchison: I share the right hon. and learned Gentleman's hope that we may be able to proceed, and I shall not take up much time. We are grateful for his acceptance of the first Amendment and welcome the substitution of maximum penalties for fixed penalties in certain cases. Nevertheless, we cannot regard the difference between cases of negligence and cases of fraud as being sufficiently marked in the Bill at present. I agree that as a subject for discussion penalties are illogical and usually inconsistent. None the less, the Clauses dealing with them are tolerably simple.
I need hardly tell the right hon. and learned Gentleman that fraud is a very serious matter. Moreover, its consequences are recognised in the law of the land, in other Statutes than this, to be different in kind and certainly more grave in character than this of negligence, however extensive it may be. For that reason we shall adhere to our view

that the difference between the penalties in the two Clauses ought to be larger, and we hope to be allowed to divide the Committee when the time comes.
As to Clause 47, I would point out that it provides maximum penalties, but that if there was ever a case for varying penalties, this type of case is one. I would call the attention of the right hon. and learned Gentleman to the fact that the Perjury Act, which in some ways has a resemblance to what we are now discussing and would cover some Income Tax offences, lays down maximum penalties with regard to people who make false declarations. But in respect of those who aid, abet or suborn them there is no limit to the amount of imprisonment or the fine which may be imposed. I believe that the relevant Sections in the Perjury Act are Sections 5 and 7.
We should be very slow to put anything like a low limit on cases of this kind, which may be very serious and, in the language of Clause 47, in practice may amount to fraud. There is no distinction between the language.

The Attorney-General: If it does amount to fraud and is a case which comes within Clause 47, the view of the Revenue is that there should be a prosecution, so Clause 47 really has little application. I find it difficult to visualise a case where someone knowingly assists in the preparation of an inaccurate return and does not do so fraudulently. In those circumstances we believe that £500 is a sufficient maximum. If it is a minor fraud, £500 may be a sufficient maximum, but if it is in the nature of a serious fraud the right thing to do is to prosecute.

Mr. Mitchison: I accept without hesitation what the right hon. and learned Gentleman says is the view of the Revenue, but I cannot envisage any case in which what is required in respect of Clause 47 falls short of fraud.

The Attorney-General: I find it very difficult to do so.

Mr. Mitchison: The right hon. and learned Gentleman finds it very difficult; I, being made of feebler stuff, find it impossible to draw any distinction between the two. We shall, therefore, press the other Amendments to a Division when the time comes.

Mr. Geoffrey Stevens: I have no wish to detain the Committee for long, but I have two points to make. First, those who have seen the jungle of which the previous penalty provisions consisted, and to which the hon. Member for Sowerby (Mr. Houghton) referred, cannot but be lost in wonder at the good job which those responsible for Part III have made of it.
Secondly, when I saw the Bill for the first time I, too, wondered if the differences between the penalties for negligence and fraud, respectively, were sufficient. I listened with great interest to the debate, and I am still not satisfied on one point. The hon. Member for Sowerby and my right hon. and learned Friend concentrated upon the borderline case between negligence and fraud—the case which the Revenue thought was fraudulent but believed it might not succeed in if it took the case to court, and therefore proceeded on the ground of negligence rather than fraud.
5.0 p.m.
I have in mind a different type of case. I am thinking of the young fellow, or the young girl, starting out in life in a profession or career having forgotten the £20 interest, or whatever it might be, from the savings bank account, or having forgotten a few shares or something of that kind. I am thinking too of the elderly widow who did not know that her husband had a deposit account or held a few shares. Are the penalties in those cases not rather too severe? That kind of case will be far more common than the case in which there is deliberate fraud.
In that context I am thinking of the provisions of Clause 48 which, in certain circumstances does away with the six-year limit, and often in cases of negligence there can be a period of 12 years in accordance with the Clause, and, under certain circumstances, more than that. I am aware, as my right hon. and learned Friend said, that the penalties in the Bill are maxima and not the normal penalties. I heard what he said, but I should like a further reassurance that they are, in fact, maxima and that in the cases of negligence of the kind that I have in mind the Inland Revenue will not depart from its previous practice, to which the hon. Member for Sowerby

referred, of exercising the powers in a reasonable fashion. I am sure that the hon. Member for Sowerby was right about past practice, but I should like my right hon. and learned Friend to give the Committee an assurance that that practice will not change.

The Attorney-General: I can give the assurance asked for by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens), that the Revenue will adhere broadly to the present practice of reasonableness which it has adopted heretofore. If it had not adopted a reasonable practice there would have been great public disquiet and public complaint many years ago. We are now reviewing very old provisions.
I was asked about the person who was slightly negligent, and whether the penalties were not too high. I do not think that they are. After all, if the negligence is slight, the penalty can be adjusted to some smaller penalty, and even if the penalty is thought to be too high recourse can be had to the courts.
The hon. Gentleman is wrong in one respect. The effect of opening up the earlier years in Clause 48 for the collection of back duty in relation to negligence does not enlarge the period in respect of which the penalty can be imposed. That is fixed there for six years.

Mr. Houghton: I stressed that these were maxima penalties, and our purpose was to arm the Inland Revenue with an effective deterrent of penalties which would be really salutary in the worst cases. It does not mean that the case of an oversight need be penalised, and thousands upon thousands of cases are not. It depends on the degree of culpability and the degree of negligence, whether it is slight or excessive, or something which seems to be a little more sinister.
I am sure that the Committee does not want to go out as being vindictive in its treatment of taxpayers, even delinquent taxpayers, and certainly we on these benches do not. Our sole purpose is to arm the Inland Revenue with something effective when the need arises to use its power.

The Attorney-General: I think that the hon. Member for Sowerby (Mr. Houghton) has made it quite clear that it


is his intention to arm the Revenue with powers much in excess of the powers which the Revenue desires.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 43.—(PENALTIES FOR FAILURE TO MAKE CERTAIN RETURNS, ETC.)

Mr. Geoffrey Hirst: I beg to move, in page 38, line 21, at the end to insert:
deducting any tax paid in respect of the income charged in these assessments before the end of the year next following that in which the said notice was served.
The point at issue can be put shortly, but I hope that my hon. and learned Friend the Solicitor-General—as I feel sure will be the case—will realise that, however shortly it may be put, it is an important point and one on which we need clarification.
For convenience, may I draw the attention of the Committee to subsection (2), which says:
…the first of the penalties mentioned in subsection (1) of this section shall be an amount not exceeding the aggregate of fifty pounds and the total amount of the tax with which the said person is charged (whether for one or for more than one year of assessment) in assessments …
The Amendment is made in that context.
As I have been given to understand, the position is that a taxpayer who, having received a notice but not having made a return, may nevertheless have paid all, or at any rate part, of the tax on which he should be assessed, by deductions under P.A.Y.E. The question is whether provision is made for that eventuality, and whether the penalty he may suffer could be more than was intended, by not taking cognisance of that fact. People to whom I have spoken appear confused about the position. I put it frankly to the Committee that one authority seems to be of the opinion that this is safeguarded by subsection (3). I hope my hon. and learned Friend will make that clear, because I am not a lawyer or a tax expert. I cannot see it, but I hope that my hon. and learned Friend will be able to make that point abundantly clear. It is an important matter, and it could be serious for the

range of taxpayer who, far from wishing to do anything fraudulent in the way that we have been discussing, may have slipped up by not having sufficient knowledge of tax matters and thus be caught unreasonably and unfairly for a failure to make a return after notice.
Having said that, I apologise to the Committee for having put my name to a mass of Amendments to one or two of the earlier Clauses and then not been present when they were discussed. My absence was due to sickness during the latter part of last week. It is discourteous to put one's name to an Amendment and be absent when it is discussed, but there was an unfortunate reason for my absence last week.

The Solicitor-General (Sir Jocelyn Simon): I am sure that the Committee would wish me to welcome back my hon. Friend the Member for Shipley (Mr. Hirst) and to express our pleasure that he has obviously recovered his full vigour.
As my hon. Friend said, this is an important matter. The Clause is very concisely drawn, and it is not altogether easy to see how it works. I do not think that it falls into the injustice indicated by my hon. Friend. Subsection (1) is intended as a lever to extract the return, and it is for that reason that under subsection (5) there is no liability if the return is rendered before the proceedings commence, subsection (1) applying both to the return of one's own income and to the return of other people's income.
Subsection (2) increases the penalty in relation to returns of the taxpayer's own income if the return is not made before the end of the year following that in which it is served. In other words, it imposes an additional penalty for continued default. The penalty is £50 plus the total amount charged in delayed assessment.
The Clause really turns on lines 25 and 26, where in referring to assessments it says:
made after the end of the year next following the year of assessment in which the said notice was served
We are concerned with three different years. First, the year of assessment which is referred to, for example, in line 27, which perhaps one could call year 1. Next there is the year during which the


notice of assessment is served which is referred to in lines 16 and 17. That is year 2. Finally, there is year 3, the year of assessment following that during which the notice was served, which is referred to in lines 15 and 16, and lines 25 and 26 to which I have just referred.
Apart from P.A.Y.E., which is dealt with in subsection (3), taxpayers do not pay tax before they are assessed, and assessments are normally made during the year following the year in which the income arose—in other words, during year 2. Such an assessment would not come into account at all in computing the penalty under subsection (2), because it is not an assessment made after the year next following the year of assessment in which the said notice was served.
The way in which it works is this. Failure to declare income may result in under-assessment during the year in which the notice was served, year 2—that is, the year following the year in which the income arose, year 1. The rectification of such under-assessment can only appear in an assessment made after that year, in other words, during year 3 or later, and that is, as I said before, the year referred, to in lines 25 and 26. It is only an assessment made after the end of year 3 which can affect the penalty.
Perhaps it would assist the Committee if I gave an example. If we take a taxpayer who earns income during year 1 on which tax of £1,000 is payable and if he fails to make a declaration of income and notice is served on him early in year 2 he is then liable under subsection (1). If he still fails to make any declaration after the end of year 3 he is liable under subsection (2). In the meantime, if an assessment has been made on him during year 2 for £800 tax, the full amount of his liability not being known, so that there is an underassessment of £200 tax, and if that is corrected after the end of year 3, it is that £200 correction and not the £1,000 which is the measure of the penalty.

Mr. Hirst: Mr. Hirst rose—

The Solicitor-General: Perhaps my hon. Friend will allow me to go on because I dealt with a simple case. I have not dealt with the case which I know he has in mind, and which I have to lead up to in this way. I dealt with

the ordinary case where the taxpayer does not pay tax before assessment. I know that the case which my hon. Friend has in mind is that where, for example, under P.A.Y.E. a man pays tax before assessment. That is dealt with in subsection (3).
If it were practical to deal with the matter in the way in which my hon. Friend seeks to deal with it, and, indeed, in the way which is suggested in the Amendment in the name of my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), that would be a fair and correct way of dealing with it. But it falls down on the practical difficulty that under P.A.Y.E. it is impossible to calculate the tax paid in a later year in respect of an earlier year. My hon. Friend's Amendment states:
…tax paid in respect of the income charged in these assessments…
For example, if we have a director paid salary, and in the following year a bonus in respect of the business that has been ascertained in respect of the previous year, under the P.A.Y.E. system one cannot tell whether the tax that is deducted is being deducted in respect of the current salary or of the bonus in respect of the previous year.
It is because of that purely practical difficulty that we have undertaken the rather more cumbrous approach in subsection (3). What it does is to give credit for the tax deducted in the year for which the assessment is made, that is, year 1 in the way indicated earlier. I do not know whether the Committee would like me to spell out the way in which it would work. [HON. MEMBERS: "No"] There seems to be a general consensus of opinion that that is not desired. I can assure my hon. Friend that his approach only breaks down in the practical way that P.A.Y.E. is collected and what it is referred to. What we do under subsection (3) is to give credit for the tax deducted in the year for which the assessment is made.

5.15 p.m.

Mr. J. Enoch Powell: It is no disparagement of my hon. and learned Friend's lucid explanation of these two subsections—and there is no irony in that adjective—if I ask him to direct his attention to a further possible point which may be involved. I adopt his convenient notation of years 1, 2 and 3.
I appreciate that where an assessment which will be a provisional assessment has been made before the end of year 3, then the amount collected against that assessment is deducted from the amount which enters into the penalty under subsection (2). The case about which I want to ask my hon. and learned Friend is where, for any reason, no assessment at all in respect of the year of income, year 1, has been made before the end of year 3. It then appears that Income Tax might have been paid on the whole or part of the income of year 1 by P.A.Y.E., but because no assessment at all, for one reason or another, has been raised in respect of that year before the end of year 3 it might not benefit from the terms of these two subsections and might still be included in the amount of the penalty, because it would be covered by an assessment—and now I am reading from paragraph (b) of subsection (2)—
made after the end of the year next following the year of assessment in which the said notice was served.
I hope that I have directed my hon. and learned Friend to the point which is causing me and other hon. Members some difficulty.

The Solicitor-General: I should like, if I may, to consider at greater leisure the case which my hon. Friend has put to me. As I said, what subsection (3) does is to allow for tax which was deducted in the year for which the assessment was made, whether or not it was actually assessed to tax at the time. It is true that in a case where, for example, we do not have a continuing bonus but where a bonus was paid in year 2 in respect of year 1 and where no bonus was paid in year 1 in respect of a previous year, the penalty is fortuitously inflated. It may be that case which my hon. Friend has in mind.
I think that the answer to the point that these are maximum penalties, is that undoubtedly the Inland Revenue would discount any fortuitous inflation of the penalty. If necessary, of course, there is appeal to the Commissioners and to the court who both have power to mitigate. But, as I said, I should like to consider at greater leisure the point which my hon. Friend has put to me.
I hope that, with that explanation, my hon. Friend the Member for Shipley (Mr. Hirst) will feel that he can withdraw his Amendment.

Mr. Hirst: I am extremely grateful to my hon. and learned Friend for that explanation. It is an extremely difficult matter, and I am anxious to hold him as firmly as I am able to his consideration of the matter later in the proceedings because I do not think that it is sufficient to say only that these are maximum penalties and that the Inland Revenue would not take advantage of them.
The Inland Revenue or the courts have to interpret the law as we pass it, and there is always the danger that a taxpayer might be put to a great amount of trouble, and possibly expense, just because we cannot, or I cannot, find a form of words which are suitable to this occasion and which are sufficiently clear for insertion in the Bill. There is no quarrel in intention between my hon. and learned Friend and myself, and, indeed, my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). I hope that we do not have to leave it in some airy-fairy way throughout the whole proceedings, and provided that I am assured, and I think I can be assured, that my hon. and learned Friend will give it serious consideration, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Powell: There is one further point on this Clause to which I should be grateful if my hon. and learned Friend the Solicitor-General could give some consideration. As I apprehend it, this Clause replaces the effect, amongst others, of Section 55 of the Income Tax Act, 1952. There appear to be certain provisions in that Section which are useful and which, perhaps, are not fully picked up in the Clause now before the Committee.
I have in mind particularly subsection (3) of that Section, which provides that when proceedings have been commenced in such a case as we are here dealing with, if the General Commissioners are satisfied that no fraud or evasion was intended, they can stay the proceedings, and if proceedings have been commenced


in a court, if they certify that in their opinion there was no fraud or evasion, the court may, on their application, stay the proceedings. It seems possible that the benefit of that provision in the 1952 Act, which one would have thought was clearly a convenient one to have, is not fully covered in the Clause before the Committee.
I note the words "without reasonable excuse" in subsection (1, b), but I would doubt whether they alone are sufficient to have the effect of Section 55 (3) of the 1952 Act. I do not want to trouble my hon. and learned Friend necesarily to answer now, but I hope he will feel that this is worth while his careful consideration before the next stage of the Bill.

Mr. James Dempsey: I wonder whether the Minister will also clarify some of the principles in this Clause, which seeks to penalise people for failure to make certain returns. I am very anxious to know what type of return is made and what is expected in a declaration in this matter, because I have discovered, during my short stay in London, that there are many methods of paying expenses, and I am wondering whether these methods are recorded in returns made to the Inland Revenue Department.
I have in mind a very well-known club, which operates on the basis that one pays by actually signing a card, and once one has signed that card and handed it to the hotel proprietor it is sent down to the firm of which the trader is a member or representative and the firm pays. I should like to know whether these expenses returns are itemised so as to indicate the details or whether they are produced showing one lump sum.
I know of an instance when a certain hon. Member of this House had a little party in an hotel. The cost of his party, which ended at half-past two o'clock in the morning, was £179. That was paid by the firm under this card system of the club, and I understand that it was returned as a business expense or an entertainments expense. I wonder whether it was an itemised or otherwise form of expense account, sent in to the Inland Revenue and simply accepted. I wonder whether that comes within the meaning of the words in subsection (1, a) of this Clause, because this can lead to

many abuses. I happened to have this membership card in my hand only yesterday, and it indicates that, in addition to having a very good time in hotels in London, there is even an affiliation system whereby one can go to New York.
I am curious, and believe that this is part of the business expenses of the firm or company. If we study this kind of transaction, we find that one can even visit certain shops and can have all kinds of things, including a new suit, or take one's good lady to a hairdresser's and to the beauty parlour and see that she is very well looked after, and all this is being paid for through club-membership out of business expenses. Incidentally, is not the Inland Revenue—

The Temporary Chairman (Sir Norman Hulbert): I am not quite clear how the hon. Gentleman relates these adventures to the penalty Clauses in the Bill.

Mr. Dempsey: I am relating them to the words in subsection (1, a), which concerns the nature of the return to be sent to the Inland Revenue, and provides for certain penalties to be imposed for failure to make accurate returns and to furnish particulars. Therefore, I am concerned whether in this Clause we are taking care of the opportunity of abuse which might easily happen.
The reason why I raised this is very simple. It is because it has very wide implications. If one analyses this system of incorporating expenses and the way provided in this Clause for the recovery of these expenses in accordance with the provisions of subsection (1, a), we find that under this system one can have fishing tackle, fishing material and an abundance of things. Indeed, according to the booklet, I think one could live in hotels from Aberdeen to New York. I will be quite frank about it. The name of the club is well-known. It is called the Finders' Services Club. I am wondering whether this club is a fiddlers' services club. I should like to know from the Minister for my own guidance and clarification whether business expenses are itemised, or whether the provisions of this subsection deal with such possible abuses. I should be delighted if the Minister could guide me in that respect.


I have the ordinary Inland Revenue Income Tax form which is sent to every taxpayer, which tells us, in Section 35, the penalties for failing to make accurate returns, and if a worker sends in an inaccurate return we know that the Department will deal with him pretty severely. My concern is whether the Department is effectively dealing with this type of abuse. Is it aware of this particular abuse? Will the Minister give me an assurance that in dealing with this problem, these business expenses will be itemised in order to ensure that the Inland Revenue Department is receiving accurate returns, so that they can locate the defaulters with a view to taking effective action against them.
It is with that end in view that I have raised this matter on the Clause standing part, and I would appreciate it very much if the Minister could give me some guidance or some clarification on this important problem. I would like to know whether, when these companies and their directors or representatives are recording their expenses, they appear as one total of business expenses, thus tax-free, or whether they are itemised to facilitate taxation so that the Department can ensure that all sections of the community are paying their legitimate taxes.

5.30 p.m.

The Solicitor-General: Clause 43 (1) refers to
a notice or precept served under or for the purposes of any of the provisions specified in the first or second column of the Fifth Schedule to this Act.…
The Fifth Schedule has three columns, of which the first relates to returns of one's own income, the second to other people's income and the third to various miscellaneous provisions which do not require a notice at all.
In addition, under these provisions the Inspector of Taxes can require further information, and this is the kind of case which the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) has in mind. The way it works is this: if a person claims to set off certain expenses against his trading profits or the profits of his occupation, the inspector can either at that stage disallow them and make him prove them or he can require him to particularise them. If there is a failure to furnish particulars which the inspector

is entitled to require under the provisions of the Fifth Schedule, then a default takes place such as the Clause envisages. It is for the taxpayer claiming relief to make out his case, and unless the inspector is satisfied he will, if necessary, require the taxpayer to make his case on appeal.

Mr. John Diamond: The Solicitor-General has missed 90 per cent. of the point. He is dealing with a case in which a claim is made for expenses deducted against income. The whole point of the club mentioned by my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) is that this is a method whereby no claim is ever made. The expenses are provided by a third party. The cost of living is provided by a third party. No expenses are claimed by the taxpayer. My hon. Friend is right in asking whether the Clause covers this case.

The Solicitor-General: If no claim is made, then the Clause does not arise. No issue arises. I cannot discuss an individual case on the Floor of the House, but if the hon. Member sends me any particulars about which he is disturbed or, better still, sends them to one of my hon. Friends at the Treasury, we will look into them.
In reply to my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), as he indicated, Section 55 is repealed in the Schedule. Section 55 (2) is replaced by the first part of Clause 43 (5). Section 55 (1) is repealed and not replaced, because it does not fit in with the general structure of the new penalty provisions, although Clause 45 (3) replaces certain of its provisions. Section 55 (3) and (4) are repealed and not replaced, because they are not appropriate to the new structure of the penalties.

Mr. Dempsey: I am grateful to the Solicitor-General for the information which he has imparted, but I should like to make it clear that it is possible for a person using this club to entertain himself and his family in England, to have a trip to New York and to have his lady visit a beauty parlour. This is not impossible. It is quite a practical proposition. If that expense appears in the form of a single general expense by a company and is not itemised, how will


the Inland Revenue be able even to suspect that there has been an abuse of the legislation? I believe that this happens in the United Kingdom. We have not been concerned in public life without seeing all the shortcomings throughout the country.

The Temporary Chairman (Mr. F. Blackburn): Order. The hon. Member is going a little wide of the Clause. Before the Clause can be applied to the point which he is making, a notice or precept will have to be served.

Mr. Dempsey: I am asking the Solicitor-General whether they require, by notice, these business expenses to be itemised in order to determine the rate of tax.

The Temporary Chairman: I think that what the hon. Member is saying is very important, but I doubt very much whether it arises under the Clause.

Mr. E. G. Willis: My hon. Friend is referring to the words in line 4 of paragraph (a)
to deliver any return, statement, declaration, list or other document…
He wishes to know whether that would include the type of expenditure to which he is referring. Surely that is relevant to the words in the Clause.

The Temporary Chairman: Yes, but the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) has already made that point, and he seems to be repeating it.

The Solicitor-General: I think that I can deal with the point shortly. I thought that I had dealt with it in my previous intervention. The Clause operates when a person
has been required, by a notice or precept…to deliver any return, statement, declaration…to furnish any particulars…
It all depends on the facts of the case whether the inspector will require further particulars or require a return such as is referred to in that subsection.
Obviously, where no return of income has been made by somebody whom they know to be within the tax net, a notice will be served. In addition to that, further particulars may be required. In the case which the hon. Member put to me, it might well be required of a company further to particularise, but it will

all depend on the facts of the case. As far as this Clause is concerned, once the notice has been served and there is a failure to comply with it within the general terms of the Clause, then the penalties become considerable, as laid down later in the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 44.—(PENALTY FOR FRAUDULENTLY MAKING INCORRECT RETURNS, ETC.)

Mr. Mitchison: I beg to move, in page 39, line 23, at end insert:
or

(d) for the purpose of obtaining any allowance, reduction, rebate or repayment in respect of income tax, either for himself or for any other person, or in any return made with reference to income tax, makes any false statement or false representation; or
(e) under subsection (8) of section two hundred and twenty-five (Insurances, etc., made before 1916 and certain other payments) of the Income Tax Act, 1952, gives or produces a false certificate."
The effect of the Amendment would be to insert two paragraphs into the subsection which deals with cases of fraud, and the two paragraphs come out of the part of the jungle, to take a phrase used by an hon. Member opposite, which has not been cleared by the Bill. It is a very considerable part. When I asked him about this on 26th May, the Solicitor-General said,
I can give details when we resume on the penalties which remain untouched. They are all for minor offences and are small penalties, and they do not really fit in very well with this new code. I can give the details…I believe there are only about two of them"—[OFFICIAL REPORT, 26th May, 1960; Vol. 624, c. 836.]
In fact there are very many more than that. There is a list to which I have kindly been given access, of some twenty-three or thereabouts of these provisions which still remain, and they vary considerably in character.
There is, for instance, a Section of the Income Tax Act which lays a fine of £2 on appointed persons who fail to price goods poined in Scotland. At the other end of the scale, the penalty for transferring companies or businesses abroad without Treasury consent in the case of the individual remains as imprisonment for a term not exceeding two years


and/or a fine not exceeding £10,000—a good deal larger than anything we are dealing with in this Bill. I cannot, therefore, accept the view of hon. Gentlemen opposite that the jungle has been removed. All that has been done is to make a very small clearing in the middle of it. The object of this Amendment is to persuade the Government to do a little more clearing and, if possible, to remove the jungle altogether.
It is most unsatisfactory that provisions of the same character should be found now not only in this Bill and in the Income Tax Act itself but in sundry other Acts, and that prosecutions should take place under Acts of which the right hon. and learned Gentleman was unable to give me particulars when I asked for them the other day. By this Amendment all we are doing is to suggest the inclusion of two provisions. One comes from Section 505 of the Income Tax Act. If we put it into the Clause, it would seem to me to add little or nothing to what is there already, but if it does add anything, all the better.
When we look at what may be done under the Sections not dealt with in this Bill, we find that the penalties vary considerably. In Section 505 which contains the general penalty for fraudulent statements in returns for claims and so on, there is a penalty on summary conviction of imprisonment not exceeding six months and a money penalty which has now been increased to £100.
I have also been looking at the Perjury Act. In Section 5—I understand there have been prosecutions under this Act in connection with the Revenue—it states—
if any person knowingly and wilfully makes…a statement false in a material particular, and the statement is made"—
and various documents are set out in the Act. I will not trouble the Committee with the rather long list, although they clearly include things like Income Tax declarations and documents which are properly called for by the inspector and then rendered to him.
Another case under the Perjury Act relates to crime, but so far as I can see it refers to the same thing. This time the offender is guilty of a misdemeanour and he is liable on conviction on indictment to imprisonment for a term not

exceeding twelve months or a fine, or both, such imprisonment and fine, and there is in that case no limit to the fine.
The result appears to me to be that, under Section 505 of the Income Tax Act, which is left untouched, a person could be prosecuted and dealt with for doing exactly the same thing as under this Clause or under the provisions of the Perjury Act. No doubt some ingenious person might find one or two cases which could not be dealt with under all three provisions, but I think that he would be hard put to find them. I suggest that the Government ought to make up their mind what they think is the right penalty for doing the same thing and stick to it. There ought to be a penalty simply depending on which legislative provision is selected.
5.45 p.m.
The other case I need not go into in detail. It relates to Section 225 and is rather different and a special case. Again, it is a case of wilfully and knowingly doing things which in effect seems to me to be fraud. In that case the only penalty at present is the forfeiture of £50 under Section 225 (8) of the Income Tax Act. Here the same point arises. Clearly people who gave a false certificate in connection with life assurance relief would be caught by the general provisions of the Clause which we are discussing, and have to be left at the same time in the position of being liable under two Sections for doing exactly the same thing and subject to widely different penalties.
These are only two out of a large number of cases. Some of them, like the £2 penalty in Scotland, are obviously obsolete. In this penalty, reference is made to 40s. sterling, and it goes back to the time when there were two currencies in Scotland, one Scottish and the other sterling, and it was necessary to state which was referred to when a penalty was laid down. There are other obsolete penalties, some of which were mentioned by my hon. Friend the Member for Sowerby (Mr. Houghton) the other day. Surely they had better be repealed and where there are, as in the cases which I am mentioning particularly, two or three penalties for doing exactly the same thing, the Government should make up their mind which is the right one and stick to it. The object of


the Amendment is to persuade the Government to make what cannot be attempted by the Amendment itself—a complete clearance of the jungle. This represents only the cutting down of a couple more thickets.

The Attorney-General: The hon. and learned Member for Kettering (Mr. Mitchison) has misconceived the position particularly with regard to Section 505. Last Thursday night the hon. and learned Gentleman asked me how many penal provisions were contained in the Income Tax code which were not picked up in Part III of the Bill. I said that there were some. At the time when he asked the question my right hon. Friend had supplied to the hon. Member for Sowerby (Mr. Houghton) a schedule showing exactly what offences had not ben picked up, and that is the schedule to which the hon. and learned Gentleman has referred today. He will agree that some of the offences are of a trivial character. Perhaps some may be regarded as obsolescent if not obsolete. On the other hand, some are particularly important especially the one to which he referred dealing with the transferring of companies or businesses abroad without Treasury consent. That we should not touch.
I am sure that the hon. and learned Gentleman will agree when he looks at these provisions in the Schedule that none of them fits conveniently into the code contained in Part III of the Bill. They all deal with other related maters. I will come to Section 505 in a moment. Some of the penalties imposed, we think, are right. For instance, the penalty under Section 20 (6) of the Finance Act, 1956, for failure to deliver returns of fees, commissions, etc. is a penalty not exceeding £50 plus £50 a day. That is a substantial penalty which we think right because unless there is a substantial penalty we shall not get particulars of what I might politely call secret commissions paid by some people. I do not think that there is any justifiable criticism made of Clause 44, on account of the fact that it does not attract any of these detailed provisions.
As was said by the hon. and learned Gentleman, the objects of the Amendment are twofold. One is to incorporate within Clause 44 what is in Section 505 of the Income Tax Act, 1952. I think

there that the hon. and learned Gentleman is linking two things which should be separated, the power to prosecute and the power to recover a monetary penalty. So far as I can see, without the inclusion of his proposed paragraph (d) this matter already comes within Clause 44 when there is a fraudulent statement or representation so that there is no case for adding paragraph (d)
Coupled with his proposal to add that paragraph is a proposed Amendment to the Seventh Schedule, page 79, line 48 to repeal Section 505 of the 1952 Act. That is the Section which enables the Revenue, where it so decides, to prosecute—one must keep prosecution distinct in one's mind from penalty proceedings under these provisions—by way of summary prosecution. It is obviously right that the power to institute summary proceedings should be retained. If we repeal that provision, as the hon. and learned Gentleman suggests, it would merely mean that proceedings would then be started which would lead to committals and appearances at quarter sessions and assizes even in the smallest range of cases. There is no case made out for repealing Section 505.
The hon. and learned Gentleman drew attention to the various statutory provisions under which it is possible to prosecute for criminal offences. He referred to the Perjury Act. Last Thursday night he asked under what provisions prosecution, as distinct from proceedings for the recovery of a penalty, could be brought. There are the Perjury Act provisions, the Forgery Act and the common law offence of fraud against the Crown. In addition, under Section 505, proceedings will be brought where there is a prosecution and the appropriate charge will be preferred depending on the facts of the case. The penalty imposed by the courts on conviction does not depend solely on the nature of the charge preferred. The court will assess the correct punishment to impose having regard to the conduct of the convicted taxpayer. I think that the hon. and learned Gentleman should keep the two things quite distinct.
In the Bill we are not attempting to alter the position with regard to prosecutions. We intend to clear up the jungle of the penalties for fraud and negligence which now exist in the


income Tax Act, 1952, and I hope that I have made that clear to the hon. and learned Gentleman.
I will turn now to paragraph (e) to be inserted in Clause 44 to which is linked an Amendment to the Seventh Schedule, in page 78, line 22, col. 3, at the end to insert:
In section two hundred and twenty-five, in subsection (8), the words "A person who wilfully gives or produces a false certificate shall forfeit the sum of fifty pounds.
This deals with an entirely different matter. Section 225 of the Income Tax Act, 1952, provides among other things for relief from tax in respect of premiums paid under insurance policies or deferred annuity contracts on the life of the taxpayer or his wife entered into with an insurance company or registered friendly society before the year 1916. Subsection (8) provides that
Where premiums in respect of any insurance effected with a registered friendly society are made payable for shorter periods than three months ߪ
the taxpayer, in order to obtain relief must produce a certificate,
signed by an officer of the society, specifying the correct amount of premiums paid during the year of assessment. A person who wilfully gives or produces a false certificate shall forfeit the sum of fifty pounds.
The second part of the Amendment proposed by the hon. and learned Gentleman would repeal those words. In fact, I think that the penalty could be imposed under Clause 44 as it stands. The Clause would bite on the production of a false certificate. But in my submission there is no ground for making any specific reference to this matter as is suggested in paragraph (e) of the Amendment.
With respect to the hon. and learned Gentleman, the matter is trivial in the extreme. First, the number of pre-1916 insurances with friendly societies still in force must be small and diminishing. Secondly, in 1916 a friendly society was precluded by law from insuring a capital sum of more than £300 or an annuity of more than £52 a year, so the maximum premiums would be quite small. Thirdly, the requirement of a certificate is limited to cases where the premiums are payable for shorter periods than three months, that is to say, the cases

where ordinarily the premiums to friendly societies are paid to officers who call weekly. In such cases, the capital sum or annuity is likely to be substantially less than the maximum amount permitted by law and the certificate is, in practice, dispensed with, save in exceptional circumstances.
We feel that the present penalty of £50, which the Bill as it stands does not propose to alter, is perfectly adequate for this and there is no need to alter that provision, as, indeed, there is no need to make a specific reference to this class of insurance by adding paragraph (e) to Clause 44.
I have dealt as shortly as I can with the hon. and learned Gentleman's Amendment. I do not think that we have ever claimed that we have by Part III cleared up all the possible ways in which people can be prosecuted. We have not set our hands to that task. What we claim is that by Part III we have made very great improvements in the provisions for penalties under the existing law.

Mr. Mitchison: I shall not follow the right hon. and learned Gentleman in his detailed explanation. He has failed completely to meet the substantial criticism which is intended and met by the Amendment. The substantial criticism is that we are left several Statutes covering the same offence, and it is quite untrue to say that this part of the Bill does not deal with the criminal aspect of the matter. There is, after all, Clause 51, which is about nothing else.
The whole matter could have been dealt with in one clearance of the jungle. A great deal of dead wood—there is dead wood—could have been got rid of and we could have removed the anomaly of the Government being able to decide under which of the variety of Statutes the same offence could be brought to book with quite different consequences to the taxpayer.
In order to protest against the inadequacy of the clearance which has been in the jungle, I hope that my hon. Friends will press the Amendment to a Division.

Question put, That those words be there inserted:—

The Committee divided:Ayes 167, Noes 249.

Division No. 99.]
AYES
[5.58 p.m.


Abse, Leo
Hughes, Emrys (S. Ayrshire)
Randall, Harry


Ainsley, William
Hughes, Hector (Aberdeen, N.)
Rankin, John


Allaun, Frank (Salford, E.)
Hunter, A. E.
Reid, William


Awbery, Stan
Hynd, H. (Accrington)
Rhodes, H.


Bacon, Miss Alice
Irvine, A. J. (Edge Hill)
Roberts, Albert (Normanton)


Baxter, William (Stirlingshire, W.)
Janner, Barnett
Roberts, Goronwy (Caernarvon)


Bence, Cyril (Dunbartonshire, E.)
Jeger, George
Robinson, Kenneth (St. Pancras, N.)


Benson, Sir George
Jenkins, Rooy (Stechford)
Rogers, G. H. R. (Kensington, N.)


Blyton, William
Johnson, Carol (Lewisham, S.)
Ross, William


Bowden, Herbert W. (Leics, S. W.)
Johnston, Douglas (Paisley)
Royle, Charles (Salford, West)


Bowles, Frank
Jones, Jack (Rotherham)
Shinwell, Rt. Hon. E.


Boyden, James
Jones, J. Idwal (Wrexham)
Short, Edward


Brown, Alan (Tottenham)
Jones, T. W. (Merioneth)
Silverman, Julius (Aston)


Brown, Thomas (Ince)
Kenyon, Clifford
Silverman, Sydney (Nelson)


Butler, Herbert (Hackney, C.)
Key, Rt. Hon. C. W.
Slater, Mrs. Harriet (Stoke, N.)


Butler, Mrs. Joyce (Wood Green)
Lee, Frederick (Newton)
Slater, Joseph (Sedgefield)


Chapman, Donald
Lipton, Marcus
Small, William


Chetwynd, George
Logan, David
Smith, Ellis (Stoke, S.)


Cliffe, Michael
Loughlin, Charles
Sorensen, R. W.


Corbet, Mrs. Freda
Mabon, Dr. J. Dickson
Soskice, Rt. Hon. Sir Frank


Craddock, George (Bradford, S.)
McCann, John
Spriggs, Leslie


Cronin, John
MacColl, James
Steele, Thomas


Crosland, Anthony
McInnes, James
Stewart, Michael (Fulham)


Cullen, Mrs. Alice
McKay, John (Wallsend)
Stonehouse, John


Darling, George
Mackie, John
Stones, William


Davies, G. Elfed (Rhondda, E.)
McLeavy, Frank
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Davies, Harold (Leek)
Mahon, Simon
Summerskill, Dr. Rt. Hon. Edith


Davies, Ifor (Gower)
Mallalieu, J. P. W. (Huddersfield, E.)
Swingler, Stephen


Davies, S. O. (Merthyr)
Manuel, A. C.
Sylvester, George


Deer, George
Mapp, Charles
Taylor, Bernard (Mansfield)


Delargy, Hugh
Marquand, Rt. Hon. H. A.
Thomas, George (Cardiff, W.)


Dempsey, James
Mason, Roy
Thomas, Iorwerth (Rhondda, W.)


Diamond, John
Mayhew, Christopher
Thompson, Dr. Alan (Dunfermilne)


Dodds, Norman
Mendelson, J. J.
Thomson, G. M. (Dundee, E.)


Dugdale, Rt. Hon. John
Millan, Bruce
Thornton, Ernest


Ede, Rt. Hon. Chuter
Mitchison, G. R.
Tomney, Frank


Edelman, Maurice
Monslow, Walter
Ungoed-Thomas, Sir Lynn


Edwards, Robert (Bilston)
Morris, John
Wainwright, Edwin


Edwards, Walter (Stepney)
Moyle, Arthur
Warbey, William


Evans, Albert
Neal, Harold
Watkins, Tudor


Fitch, Alan
Noel-Baker, Francis (Swindon)
Weitzman, David


Fletcher, Eric
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Wells, Percy (Faversham)


Forman, J. C.
Oliver, G. H.
Wells, William (Walsall, N.)


Fraser, Thomas (Hamilton)
Oswald, Thomas
Wheeldon, W. E.


George, Lady Megan Lloyd
Owen, Will
Willey, Frederick


Ginsburg, David
Pannell, Charles (Leeds, W.)
Williams, D. J. (Neath)


Greenwood, Anthony
Pargiter, G. A.
Williams, Rev. LI. (Abertillery)


Griffiths, W. (Exchange)
Paton, John
Williams, W. R. (Openshaw)


Hall, Rt. Hon. Glenvil (Colne Valley)
Pavitt, Laurence
Willis, E. G. (Edinburgh, E.)


Hamilton, William (West Fife)
Pearson, Arthur (Pontypridd)
Winterbottom, R. E.


Hart, Mrs. Judith
Peart, Frederick
Woodburn, Rt. Hon. A.


Hayman, F. H.
Pentland, Norman
Woof, Robert


Hilton, A. V.
Prentice, R. E.
Yates, Victor (Ladywood)


Holman, Percy
Price, J. T. (Westhoughton)
Zilliacus, K.


Houghton, Douglas
Proctor, W. T.
TELLERS FOR THE AYES:


Howell, Charles A.
Pursey, Cmdr. Harry
Dr. Broughton and Mr. Redhead.


Hughes, Cledwyn (Anglesey)






NOES


Aitken, W. T.
Bossom, Clive
Clarke, Brig, Terence (Portsmth, W.)


Allason, James
Bourne-Arton, A.
Cleaver, Leonard


Alport, C. J. M.
Bowen, Roderic (Cardigan)
Collard, Richard


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Box, Donald
Cooke, Robert


Ashton, Sir Hubert
Boyle, Sir Edward
Cooper-Key, Sir Neill


Atkins, Humphrey
Braine, Bernard
Cordeaux, Lt.-Col. J. K.


Balniel, Lord
Brewis, John
Cordie, John


Barber, Anthony
Brooke, Rt. Hon. Henry
Corfield, F. V.


Barlow, Sir John
Brooman-White, R.
Costain, A. P.


Batsford, Brian
Browne, Percy (Torrington)
Coulson, J. M.


Baxter, Sir Beverley (Southgate)
Bullard, Denys
Critchley, Julian


Beamish, Col. Tufton.
Burden, F. A.
Curran, Charles


Bell, Ronald (S. Bucks.)
Butcher Sir Herbert
Currie, G. B. H.


Bennett, F. M. (Torquay)
Butler, Rt. Hn. R. A. (Saffron Walden)
Dalkeith, Earl of


Bennett, Dr. Reginald (Gos &amp; Fhm)
Campbell, Sir David (Belfast S.)
d'Avigdor-Goldsmld, Sir Henry


Berkeley, Humphry
Carr, Compton (Barons Court)
Deedes, W. F.


Bevins, Rt. Hon. Reginald (Toxteth)
Carr, Robert (Mitcham)
de Ferranti, Basil


Bldgood, John C.
Cary, Sir Robert
Digby, Simon Wingfield


Biggs-Davison, John
Channon, H. P. G.
Donaldson, Cmdr. C. E. M.


Birch, Rt. Hon. Nigel
Chataway, Christopher
Drayson, C. B.


Bishop, F. P.
Clark, Henry (Antrim, N.)
du Cann, Edward


Black, Sir Cyril
Clark, William (Nottingham, S.)
Duthie, Sir William







Emmet, Hon. Mrs. Evelyn
Leavey, J. A.
Renton, David


Errigton, Sir Eric
Leburn, Gilmour
Ridley, Hon. Nicholas


Farey-Jones, F. W.
Legge-Bourke, Maj. H.
Ridsdale, Julian


Fell, Anthony
Legh, Hon. Peter (Petersfield)
Roberts, Sir Peter (Heeley)


Finlay, Graeme
Lewis, Kenneth (Rutland)
Robertson, Sir David


Fisher, Nigel
Linstead, Sir Hugh
Roots, William


Forrest, George
Litchfield, Capt. John
Ropner, Col. Sir Leonard


Fraser, Hn. Hugh (Stafford &amp; Stone)
Longden, Gilbert
Scott-Hopkins, James


Fraser, Ian (Plymouth, Sutton)
Loveys, Walter H.
Shaw, M.


Freeth, Denzil
Lucas, Sir Jocelyn (Portsmouth, S.)
Shepherd, William


Gammans, Lady
Lucas-Tooth, Sir Hugh
Simon, Sir Jocelyn


Gardner, Edward
McAdden, Stephen
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Glyn, Dr. Alan (Clapham)
MacArthur, Ian
Smyth, Brig. Sir John (Norwood)


Glyn, Sir Richard (Dorset, N.)
McLaren, Martin
Speir, Rupert


Godber, J. B.
McLaughlin, Mrs. Patricia
Stevens, Geoffrey


Goodhew, Victor
Maclay, Rt. Hon. John
Steward, Harold (Stockport, S.)


Cower, Raymond
Maclean, Sir Fitzroy (Bute&amp;N. Ayrs.)
Stodart, J. A.


Grant, Rt. Hon. William (Woodside)
McMaster, Stanley, R.
Stoddart-Scott, Col. Sir Malcolm


Grant-Ferris, Wg Cdr. R. (Nantwich)
Maginnis, John E.
Storey, Sir Samuel


Green, Alan
Manningham-Buller, Rt. Hn. Sir R.
Studholme, Sir Henry


Grimond, J.
Markham, Major Sir Frank
Summers, Sir Spencer (Aylesbury)


Grimston, Sir Robert
Marlowe, Anthony
Sumner, Donald (Orpington)


Hall, John (Wyoombe)
Marshall, Douglas
Talbot, John E.


Hamilton, Michael (Wellingborough)
Marten, Neil
Tapsell, Peter


Harris, Reader (Heston)
Matthews, Gordon (Meriden)
Taylor, Sir Charles (Eastbourne)


Harrison, Brian (Maldon)
Mawby, Ray
Taylor, W. J. (Bradford, N.)


Harrison, Col. J. H. (Eye)
Maydon, Lt. Cmdr. S. L. C.
Teeling, William


Harvie Anderson, Miss
Montgomery, Fergus
Temple, John M.


Hay, John
Morrison, John
Thatcher, Mrs. Margaret


Heald, Rt. Hon. Sir Lionel
Mott-Radclyffe, Sir Charles
Thomas, Leslie (Canterbury)


Henderson, John (Cathoart)
Nabarro, Gerald
Thomas, Peter (Conway)


Hendry, Forbes
Neave, Airey
Thompson, Kenneth (Walton)


Hicks Beach, Maj. W.
Nicholls, Harmar
Thompson, Richard (Croydon, S.)


Hill, Mrs. Eveline (Wythenshawe)
Nicholson, Sir Godfrey
Thornton-Kemsley Sir Colin


Hinchingbrooke, Viscount
Noble, Michael
Tiley, Arthur (Bradford, W.)


Hirst, Geoffrey
Nugent, Sir Richard
Tilney, John (Wavertree)


Hocking, Philip N.
Oakshott, Sir Hendrie
Turton, Rt. Hon. R. H.


Holland, Philip
Orr-Ewing, C. Ian
Tweedsmuir, Lady


Hollingworth, John
Osborn, John (Hallam)
van Straubenzee, W. R.


Hope, Rt. Hon. Lord John
Osborne, Cyril (Louth)
Vaughan-Morgan, Sir John


Hopkins, Alan
Page, A. J. (Harrow, West)
Wade, Donald


Hornby, R. P.
Page, Graham
Wakefield, Edward (Derbyshire, W.)


Hornsby-Smith, Rt. Hon. Patricia
Pannell, Norman (Kirkdale)
Wakefield, Sir Wavell (St. M'lebone)


Howard, Gerald (Cambridgeshire)
Partridge, E.
Wall, Patrick


Howard, John (Southampton, Test)




Hughes-Young, Michael
Pearson, Frank (Clitheroe)
Ward, Dame Irene (Tynemouth)


Hutchison, Michael Clark
Peel, John
Watts, James


Iremonger, T. L.
Percival, Ian
Wells, John (Maidstone)


Irvine, Bryant Godman (Rye)
Peyton, John
Whitelaw, William


Jackson, John
Pickthorn, Sir Kenneth
Williams, Dudley (Exeter)


James, David
Pike, Miss Mervyn
Wills, Sir Gerald (Bridgwater)


Jenkins, Robert (Dulwich)
Pilkington, Capt. Richard
Wilson, Geoffrey (Truro)


Jennings, J. C.
Pitman, I. J.
Wise, A. R.


Johnson, Dr. Donald (Carlisle)
Pitt, Miss Edith
Wolrige-Gordon, Patrick


Johnson, Eric (Blackley)
Pott, Percivall
Wood, Rt. Hon. Richard


Joseph, Sir Keith
Powell, J. Enoch
Woodhouse, C. M.


Kerans, Cdr. J. S.
Prior-Palmer, Brig. Sir Otho
Woodnutt, Mark


Kerby, Capt. Henry
Proudfoot, Wilfred
Woollam, John


Kerr, Sir Hamilton
Ramsden, James
Yates, William (The Wrekin)


Kimball, Marcus
Rawlinson, Peter



Kitson, Timothy
Redmayne, Rt. Hon. Martin
TELLERS FOR THE NOES:


Lambton, Viscount
Rees, Hugh
Mr. J. E. B. Hill and


Langford-Holt, J.
Rees-Davies, W. R.
Mr. Sharples.

The Temporary Chairman (Mr. Blackburn): The next Amendment is not selected for debate, but I understand that an agreement has been reached to have a Division on it. Will someone move it formally?

Amendment proposed: In page 39, line 25, leave out "fifty" and insert "one hundred".—[Mr. Roy Jenkins.]

Question put, That "fifty" stand part of the Clause:—

The Committee divided: Ayes 250, Noes 167.

Division No. 100.]
AYES
[6.8 p.m.


Aitken, W. T.
Barber, Anthony
Bennett, F. M. (Torquay)


Allason, James
Barlow, Sir John
Bennett, Dr. Reginald (Gos &amp; Fhm)


Alport, C. J. M.
Barter, John
Berkeley, Humphry


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Batsford, Brian
Bevins, Rt. Hon. Reginald (Toxteth)


Ashton, Sir Hubert
Baxter, Sir Beverley (Southgate)
Bidgood, John C.


Atkins, Humphrey
Beamish, Col. Tufton
Biggs-Davison, John


Balniel, Lord
Bell, Ronald (S. Bucks)
Birch, Rt. Hon. Nigel




Bishop, F. P.
Hill, J. E. B. (S. Norfolk)
Pickthorn, Sir Kenneth


Bossom, Clive
Hinchingbrooke, Viscount
Pike, Miss Mervyn


Bourne-Arton, A.
Hirst, Geoffrey
Pilkington, Capt. Richard


Bowen, Roderic (Cardigan)
Hocking, Philip N.
Pitman, I. J.


Box, Donald
Holland, Philip
Pitt, Miss Edith


Boyle, Sir Edward
Hollingworth, John
Pott, Percivall


Braine, Bernard
Hope, Rt. Hon. Lord John
Powell, J. Enoch


Brewis, John
Hopkins, Alan
Prior-Palmer, Brig. Sir Otho


Brooke, Rt. Hon. Henry
Hornby, R. P.
Proudfoot, Wilfred


Browne, Percy (Torrington)
Hornsby-Smith, Rt. Hon. Patricia
Ramsden, James


Bullard, Denys
Howard, Gerald (Cambridgeshire)
Rawlinson, Peter


Burden, F. A.
Howard, John (Southampton, Test)
Redmayne, Rt. Hon. Martin


Butcher, Sir Herbert
Hughes-Young, Michael
Rees, Hugh


Butler, Rt. Hn. R. A. (Saffron Walden)
Hutchison, Michael Clark
Rees-Davies, W. R.


Campbell, Sir David (Belfast, S.)
Iremonger, T. L.
Renton, David


Carr, Compton (Barons Court)
Irvine, Bryant Godman (Rye)
Ridley, Hon. Nicholas


Carr, Robert (Mitcham)
Jackson, John
Ridsdale, Julian


Gary, Sir Robert
James, David
Rippon, Geoffrey


Channon, H. P. G.
Jenkins, Robert (Dulwich)
Roberts, Sir Peter (Heeley)


Chataway, Christopher
Jennings, J. C.
Roots, William


Clark, Henry (Antrim, N.)
Johnson, Dr. Donald (Carlisle)
Ropner, Col. Sir Leonard


Clark, William (Nottingham, S.)
Johnson, Eric (Blackley)
Scott-Hopkins, James


Clarke, Brig. Terence (Portsmth, W.)
Joseph, Sir Keith
Sharples, Richard


Cleaver, Leonard
Kerans, Cdr. J. S.
Shaw, M.


Collard, Richard
Kerby, Capt. Henry
Shepherd, William


Cooke, Robert
Kerr, Sir Hamilton
Simon, Sir Jocelyn


Cooper-Key, Sir Neill
Kimball, Marcus
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Cordeaux, Lt.-Col. J. R.
Kitson, Timothy
Smyth, Brig. Sir John (Norwood)


Cordle, John
Lambton, Viscount
Speir, Rupert


Corfield, F. V.
Langford-Holt, J.
Stevens, Geoffrey


Costain, A. P.
Leavey, J. A.
Steward, Harold (Stockport, S.)


Coulson, J. M.
Leburn, Gilmour
Stodart, J. A.


Critchley, Julian
Legge-Bourke, Maj. H.
Stoddart-Scott, Col. Sir Malcolm


Curran, Charles
Legh, Hon. Peter (Petersfield)
Storey, Sir Samuel


Currie, G. B. H.
Lewis, Kenneth (Rutland)
Studholme, Sir Henry


Dalkeith, Earl of
Linstead, Sir Hugh
Summers, Sir Spencer (Aylesbury)


d'Avigdor-Goldsmid, Sir Henry
Litchfield, Capt. John
Sumner, Donald (Orpington)


Deedes, W. F.
Longden, Gilbert
Talbot, John E.


de Ferranti, Basil
Loveys, Walter H.
Tapsell, Peter


Digby, Simon Wingfield
Lucas, Sir Jocelyn (Portsmouth, S,)
Taylor, Sir Charles (Eastbourne)


Donaldson, Cmdr. C. E. M.
Lucas-Tooth, Sir Hugh
Taylor, W. J. (Bradford, N.)


Drayson, G. B.
McAdden, Stephen
Teeling, William


du Cann, Edward
MacArthur, Ian
Temple, John M.


Duthie, Sir William
McLaren, Martin
Thatcher, Mrs. Margaret


Emmet, Hon. Mrs. Evelyn
McLaughlin, Mrs. Patricia
Thomas, Leslie (Canterbury)


Errington, Sir Eric
Maclay, Rt. Hon. John
Thomas, Peter (Conway)


Farey-Jones, F. W.
Maclean, Sir Fitzroy (Bute &amp; N. Ayr)
Thompson, Kenneth (Walton)


Fell, Anthony
McMaster, Stanley R.
Thompson, Richard (Croydon, S.)


Finlay, Graeme
Maginnis, John E.
Thorneycroft, Rt. Hon. Peter


Fisher, Nigel
Manningham-Buller, Rt. Hn. Sir R.
Thornton-Kemsley, Sir Colin


Forrest, George
Markham, Major Sir Frank
Thorpe, Jeremy


Fraser, Hn. Hugh (Stafford &amp; Stone)
Marlowe, Anthony
Tiley, Arthur (Bradford, W.)


Fraser, Ian (Plymouth, Sutton)
Marshall, Douglas
Tilney, John (Wavertree)


Freeth, Denzil
Marten, Neil
Turton, Rt. Hon. R. H.


Gammans, Lady
Matthews, Gordon (Meriden)
Tweedsmuir, Lady


Gardner, Edward
Mawby, Ray
van Straubenzee, W. R.


Glyn, Dr. Alan (Clapham)
Maydon, Lt. -Cmdr. S. L. C.
Vaughan-Morgan, Sir John


Glyn, Sir Richard (Dorset, N.)
Montgomery, Fergus
Wade, Donald


Godber, J. B.
Morrison, John
Wakefield, Edward (Derbyshire, W.)


Goodhew, Victor
Mott-Radclyffe, Sir Charles
Wakefield, Sir Wavell (St. M'lebone)


Gower, Raymond
Nabarro, Gerald
Wall, Patrick


Grant, Rt. Hon. William (Woodside)
Neave, Airey
Ward, Dame Irene (Tynemouth)


Grant-Ferris, Wg Cdr. R. (Nantwich)
Nicholls, Harmar
Watts, James


Green, Alan
Nicholson, Sir Godfrey
Wells, John (Maidstone)


Grimond, J.
Noble, Michael
Williams, Dudley (Exeter)


Grimston, Sir Robert
Oakshott, Sir Hendrie
Wills, Sir Gerald (Bridgwater)


Hall, John (Wycombe)
Orr-Ewing, C. Ian
Wilson, Geoffrey (Truro)


Hamilton, Michael (Wellingborough)
Osborn, John (Hallam)
Wise, Alfred


Harris, Reader (Heston)
Osbome, Cyril (Louth)
Wolrige-Gordon, Patrick


Harrison, Brian (Maldon)
Page, A. J. (Harrow, West)
Wood, Rt. Hon. Richard


Harrison, Col. J. H. (Eye)
Page, Graham
Woodhouse, C. M.


Harvie Anderson, Miss
Pannell, Norman (Kirkdale)
Woodnutt, Mark


Hay, John
Partridge, E.
Woollam, John


Heald, Rt. Hon. Sir Lionel
Pearson, Frank (Clitheroe)
Yates, William (The Wrekin)


Henderson, John (Cathcart)
Peel, John
TELLERS FOR THE AYES:


Hendry, Forbes
Percival, Ian
Mr. Brooman-White and Mr. Whitelaw.


Hicks Beach, Maj. W.
Peyton, John



Hill, Mrs. Eveline (Wythenshawe)






NOES


Abse, Leo
Bacon, Miss Allen
Blyton, William


Ainsley, William
Baxter, William (Stirlingshire, W.)
Bowden, Herbert W. (Leics, S.W.)


Allaun, Frank (Salford, E.)
Bence, Cyril (Dunbartonshire, E.)
Bowles, Frank


Awbery, Stan
Benson, Sir George
Boyden, James







Brown, Alan (Tottenham)
Jenkins, Roy (Stechford)
Roberts, Goronwy (Caernarvon)


Brown, Thomas (Ince)
Johnson, Carol (Lewisham, S.)
Robinson, Kenneth (St. Pancras, N.)


Butler, Herbert (Hackney, C.)
Johnston, Douglas (Paisley)
Rogers, G. H. R. (Kensington, N.)


Butler, Mrs. Joyce (Wood Green)
Jones, Jack (Rotherham)
Ross, William


Chapman, Donald
Jones, J. Idwal (Wrexham)
Royle, Charles (Salford, West)


Chetwynd, George
Jones, T. W. (Merioneth)
Shinwell, Rt. Hon. E.


Cliffe, Michael
Kenyon, Clifford
Short, Edward


Corbet, Mrs. Freda
Key, Rt. Hon. C. W.
Silverman, Julius (Aston)


Craddock, George (Bradford, S.)
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Cronin, John
Lipton, Marcus
Slater, Mrs. Harriet (Stoke, N.)


Crosland, Anthony
Logan, David
Slater, Joseph (Sedgefield)


Cullen, Mrs. Alice
Loughlin, Charles
Small, William


Darling, George
Mabon, Dr. J. Dickson
Smith, Ellis (Stoke, S.)


Davies, G. Elfed (Rhondda, E.)
McCann, John
Sorensen, R. W.


Davies, Harold (Leek)
MacColl, James
Soskice, Rt. Hon. Sir Frank


Davies, Ifor (Gower)
McInnes, James
Spriggs, Leslie


Davies, S. O. (Merthyr)
McKay, John (Wallsend)
Steele, Thomas


Deer, George
Mackie, John
Stewart, Michael (Fulham)


Delargy, Hugh
McLeavy, Frank
Stonehouse, John


Dempsey, James
Mahon, Simon
Stones, William


Diamond, John
Mallalieu, J.P.W.(Huddersfield, E.)
Stress, Dr. Barnett (Stoke-on-Trent, C.)


Dodds, Norman
Manuel, A. C.
Summerskill, Dr. Rt. Hon. Edith


Dugdale, Rt. Hon. John
Mason, Roy
Swingler, Stephen


Ede, Rt. Hon. Chuter
Mayhew, Christopher
Sylvester, George


Edelman, Maurice
Mellish, R. J.
Taylor, Bernard (Mansfield)


Edwards, Robert (Bliston)
Mendelson, J. J.
Thomas, George (Cardiff, W.)


Edwards, Walter (Stepney)
Millan, Bruce
Thomas, Iorwerth (Rhondda, W.)


Evans, Albert
Mitchison, G. R.
Thompson, Dr. Alan (Dunfermline)


Fitch, Alan
Monslow, Walter
Thomson, G. M. (Dundee, E.)


Fletcher, Eric
Morris, John
Thornton, Ernest


Forman, J. C.
Moyle, Arthur
Tomney, Frank


Fraser, Thomas (Hamilton)
Neal, Harold
Ungoed-Thomas, Sir Lynn


George, Lady Megan Lloyd
Noel-Baker, Francis (Swindon)
Wainwright, Edwin


Ginsburg, David
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Warbey, William


Greenwood, Anthony
Oliver, G. H.
Watkins, Tudor


Griffiths, W. (Exchange)
Oswald, Thomas
Weitzman, David


Hall, Rt. Hon. Glenvil (Colne Valley)
Owen, Will
Wells, Percy (Faversham)


Hamilton, William (West Fife)
Pannell, Charles (Leeds, W.)
Wells, William (Walsall, N.)


Hart, Mrs. Judith
Pargiter, G. A.
Wheeldon, W. E.


Hayman, F. H.
Paton, John
Willey, Frederick


Hilton, A. V.
Pavitt, Laurence
Williams, D. J. (Neath)


Holman, Percy
Pearson, Arthur (Pontypridd)
Williams, Rev. Ll. (Abertillery)


Houghton, Douglas
Peart, Frederick
Williams, W. R. (Openshaw)


Howell, Charles A.
Pentland, Norman
Willis, E. G. (Edinburgh, E.)


Hughes, Cledwyn (Anglesey)
Prentice, R. E.
Winterbottom, R. E.


Hughes, Emrys (S. Ayrshire)
Price, J. T. (Westhoughton)
Woodburn, Rt. Hon. A.


Hughes, Hector (Aberdeen, N.)
Proctor, W. T.
Woof, Robert


Hunter, A. E.
Pursey, Cmdr. Harry
Yates, Victor (Ladywood)


Hynd, H. (Accrington)
Randall, Harry
Zilliacus, K.


Irvine, A. J. (Edge Hill)
Rankin, John



Janner, Barnett
Reid, William
TELLERS FOR THE NOES:


Jay, Rt. Hon. Douglas
Rhodes, H.
Dr. Broughton and Mr. Redhead.


Jeger, George
Roberts, Albert (Normanton)

Amendment proposed: In page 39, line 26, leave out "twice" and insert "three times".—[Mr. Roy Jenkins.]

Question put, That "twice" stand part of the Clause:—

The Committee divided: Ayes 248, Noes 169.

Division No. 101.]
AYES
[6.18 p.m.


Aitken, W. T.
Bishop, F. P.
Clark, William (Nottingham, S.)


Allason, James
Bossom, Cilve
Clarke, Brig. Terence (Portsmth, W.)


Alport, C. J. M.
Bourne-Arton, A.
Cleaver, Leonard


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Bowen, Roderic (Cardigan)
Collard, Richard


Ashton, Sir Hubert
Box, Donald
Cooke, Robert


Atkins, Humphrey
Boyle, Sir Edward
Cooper-Key, Sir Neill


Balniel, Lord
Braine, Bernard
Cordeaux, Lt.-Col. J. K.


Barber, Anthony
Brewis, John
Cordle, John


Barlow, Sir John
Brooke, Rt. Hon. Henry
Corfield, F. V.


Barter, John
Browne, Percy (Torrington)
Costain, A. P.


Batsford, Brian
Bullard, Denys
Coulson, J. M.


Baxter, Sir Beverley (Southgate)
Burden, F. A.
Critchley, Julian


Beamish, Col. Tufton
Butcher, Sir Herbert
Curran, Charles


Bell, Ronald (S. Bucks.)
Butler, Rt. Hn. R. A. (Saffron Walden)
Currie, G. B. H.


Bennett, F. M. (Torquay)
Campbell, Sir David
Dalkelth, Earl of


Bennett, Dr. Reginald (Gos &amp; Fhm)
Carr, Compton (Barons Court)
d'Avigdor-Goldsmid, Sir Henry


Berkeley, Humphry
Carr, Robert (Mitcham)
Deedes, W. F.


Bevins, Rt. Hon. Reginald (Toxteth)
Cary, Sir Robert
de Ferranti, Basil


Bidgood, John C.
Channon, H. P. G.
Digby, Simon Wingfield


Biggs-Davison, John
Chataway, Christopher
Donaldson, Cmdr, C. E. M.


Birch, Rt. Hon. Nigel
Clark, Henry (Antrim, N.)
Drayson, G. B.




du Cann, Edward
Kimball, Marcus
Rees, Hugh


Duthie, Sir William
Kitson, Timothy
Rees-Davies, W. R.


Emery, Peter
Lambton, Viscount
Renton, David


Emmet, Hon. Mrs. Evelyn
Langford-Holt, J.
Ridley, Hon. Nicholas


Errington, Sir Eric
Leavey, J. A.
Ridsdale, Julian


Farey-Jones, F. W.
Leburn, Gilmour
Roberts, Sir Peter (Heeley)


Fell, Anthony
Legge-Bourke, Maj. H.
Roots, William


Finlay, Graeme
Legh, Hon. Peter (Petersfield)
Ropner, Col. Sir Leonard


Fisher, Nigel
Lewis, Kenneth (Rutland)
Scott-Hopkins, James


Forrest, George
Linstead, Sir Hugh
Sharples, Richard


Fraser, Hn. Hugh (Stafford &amp; Stone)
Litchfield, Capt. John
Shaw, M.


Fraser, Ian (Plymouth, Sutton)
Longden, Gilbert
Shepherd, William


Freeth, Denzil
Loveys, Walter H.
Simon, Sir Jocelyn


Gammans, Lady
Lucas, Sir Jocelyn (Portsmouth, S.)
Smith, Dudley (Br'ntf'rd A Chiswick)


Gardner, Edward
Lucas-Tooth, Sir Hugh
Smyth, Brig. Sir John (Norwood)


Glyn, Dr. Alan (Clapham)
McAdden, Stephen
Speir, Rupert


Glyn, Sir Richard (Dorset, N.)
MacArthur, Ian
Stevens, Geoffrey


Godber, J. B.
McLaren, Martin
Steward, Harold (Stockport, S.)


Goodhew, Victor
McLaughlin, Mrs. Patricia
Stodart, J. A.


Gower, Raymond
Maclay, Rt. Hon. John
Stoddart-Scott, Col. Sir Malcolm


Grant, Rt. Hon. William (Woodside)
Maclean, Sir Fitzroy (Bute&amp;N. Ayrs.)
Storey, Sir Samuel


Grant-Ferris, Wg Cdr. R. (Nantwich)
McMaster, Stanley R.
Studholme, Sir Henry


Green, Alan
Maginnis, John E.
Summers, Sir Spencer (Aylesbury)


Grimond, J.
Manningham-Buller, Rt. Hn. Sir R.
Sumner, Donald (Orpington)


Grimston, Sir Robert
Markham, Major Sir Frank
Talbot, John E.


Hall, John (Wycombe)
Marlowe, Anthony
Tapsell, Peter


Hamilton, Michael (Wellingborough)
Marshall, Douglas
Taylor, Sir Charles (Eastbourne)


Harris, Reader (Heston)
Marten, Neil
Taylor, W. J. (Bradford, N.)


Harrison, Brian (Maldon)
Matthews, Gordon (Meriden)
Teeling, William


Harrison, Col. J. H. (Eye)
Mawby, Ray
Temple, John M.


Harvie Anderson, Miss
Maydon, Lt.-Cmdr. S. L. C.
Thatcher, Mrs. Margaret


Hay, John
Montgomery, Fergus
Thomas, Leslie (Canterbury)


Heald, Rt. Hon. Sir Lionel
Morrison, John
Thomas, Peter (Conway)


Henderson, John (Cathcart)
Mott-Radclyffe, Sir Charles
Thompson, Kenneth. (Walton)


Hendry, Forbes
Nabarro, Gerald
Thompson, Richard (Croydon, S.)


Hicks Beach, Maj. W.
Neave, Airey
Thorneycroft, Rt. Hon. Peter


Hill, Mrs. Eveline (Wythenshawe)
Nicholls, Harmar
Thornton-Kemsley, Sir Colin


Hill, J. E. B. (S. Norfolk)
Nicholson, Sir Godfrey
Tiley, Arthur (Bradford, W.)


Hinchingbrooke, Viscount
Noble, Michael
Tilney, John (Wavertree)


Hirst, Geoffrey
Oakshott, Sir Hendrie
Turton, Rt. Hon. R. H.


Hocking, Philip N.
Orr-Ewing, C. Ian
Tweedsmuir, Lady


Holland, Philip
Osborn, John (Hallam)
van Straubenzee, W. R.


Hollingworth, John
Osborne, Cyril (Louth)
Vaughan-Morgan, Sir John


Hope, Rt. Hon. Lord John
Page, A. J. (Harrow, West)
Wade, Donald


Hopkins, Alan
Page, Graham
Wakefield, Edward (Derbyshire, W.)


Hornby, R. P,
Pannell, Norman (Kirkdale)
Wikefield, Sir Waved (St. M'lebone)


Hornsby-Smith, Rt. Hon. Patricia
Partridge, E.
Wall, Patrick


Howard, Gerald (Cambridgeshire)
Pearson, Frank (Clitheroe)
Ward, Dame Irene (Tynemouth)


Howard, John (Southampton, Test)
Peel, John
Watts, James


Hughes-Young, Michael
Percival, Ian
Wells, John (Maidstone)


Hutchison, Michael Clark
Peyton, John
Williams, Dudley (Exeter)


Iremonger, T. L.
Pickthorn, Sir Kenneth
Wills, Sir Gerald (Bridgwater)


Irvine, Bryant Godman (Rye)
Pike, Miss Mervyn
Wilson, Geoffrey (Truro)


Jackson, John
Pilkington, Capt. Richard
Wise, A. R.


James, David
Pitman, I. J.
Wolrige-Gordon, Patrick


Jenkins, Robert (Dulwich)
Pitt, Miss Edith
Wood, Rt. Hon. Richard


Jennings, J. C.
Pott, Percivall
Woodhouse, C. M.


Johnson, Dr. Donald (Carlisle)
Powell, J. Enoch
Woodnutt, Mark


Johnson, Eric (Blackley)
Prior-Palmer, Brig. Sir Otto
Woollam, John


Joseph, Sir Keith
Proudfoot, Wilfred
Yates, William (The Wrekin)


Kerans, Cdr. J. S.
Ramsden, James



Kerby, Capt. Henry
Rawlinson, Peter
TELLERS FOR THE AYES:


Kerr, Sir Hamilton
Redmayne, Rt. Hon. Martin
Mr. Brooman-White and Mr. Whitelaw.




NOES


Abse, Leo
Cliffe, Michael
Edelman, Maurice


Ainsley, William
Corbet, Mrs. Freda
Edwards, Robert (Bilston)


Allaun, Frank (Salford, E.)
Craddock, George (Bradford, S.)
Edwards, Walter (Stepney)


Awbery, Stan
Cronin, John
Evans, Albert


Bacon, Miss Alice
Crosland, Anthony
Fitch, Alan


Baxter, William (Stirlingshire, W.)
Cullen, Mrs. Alice
Fletcher, Eric


Bence, Cyril (Dunbaronshire, E.)
Darling, George
Forman, J, C.


Benson, Sir George
Davies, G. Eifed (Rhondda, E.)
Fraser, Thomas (Hamilton)


Blyton, William
Davies, Harold (Leek)
George, Lady Megan Lloyd


Bowden, Herbert W. (Leics. S. W.)
Davies, Ifor (Gower)
Ginsburg, David


Bowles, Frank
Davies, S. O. (Merthyr)
Greenwood, Anthony


Boyden, James
Deer, George
Griffiths, W. (Exchange)


Brown, Alan (Tottenham)
Delargy, Hugh
Hall, Rt. Hon. Glenvil (Colne Valley)


Brown, Thomas (Ince)
Dempsey, James
Hamilton, William (West Fife)


Butler, Herbert (Hackney, C.)
Diamond, John
Hart, Mrs. Judith


Butler, Mrs. Joyce (Wood Green)
Dodds, Norman
Hayman, F. H.


Chapman, Donald
Dugdale, Rt. Hon. John
Hilton, A. V.


Chetwynd, George
Ede, Rt. Hon. Chuter
Holman, Percy







Houghton, Douglas
Monslow, Walter
Sorensen, R. W.


Howell, Charles A.
Morris, John
Soskice, Rt. Hon. Sir Frank


Hughes, Cledwyn (Anglesey)
Mort, D. L.
Spriggs, Leslie


Hughes, Emrys (S. Ayrshire)
Moyle, Arthur
Steele, Thomas


Hughes, Hector (Aberdeen, N.)
Neal, Harold
Stewart, Michael (Fulham)


Hunter, A. E.
Noel-Baker, Francis (Swindon)
Stonehouse, John


Hynd, H. (Accrington)
Oliver, G. H.
Stones, William


Irvine, A. J. (Edge Hill)
Oswald, Thomas
Strachey, Rt. Hon. John


Janner, Barnett
Owen, Will
Stress, Dr. Barnett (Stoke-on-Trent, C.)


Jay, Rt. Hon. Douglas
Pannell, Charles (Leeds, W.)
Summerskill, Dr. Rt. Hon. Edith


Jeger, George
Pargiter, G. A.
Swingler, Stephen


Jenkins, Roy (Stechford)
Paton, John
Sylvester, George


Johnson, Carol (Lewisham, S.)
Pavitt, Laurence
Taylor, Bernard (Mansfield)


Johnston, Douglas (Paisley)
Pearson, Arthur (Pontypridd)
Thomas, George (Cardiff, W.)


Jones, Jack (Rotherham)
Peart, Frederick
Thomas, Iorwerth (Rhondda, W.)


Jones, J. Idwal (Wrexham)
Pentland, Norman
Thompson, Dr. Alan (Dunfermline)


Jones, T. W. (Merioneth)
Prentice, R. E.
Thomson, G. M. (Dundee, E.)


Kenyon, Clifford
Price, J. T. (Westhoughton)
Thornton, Ernest


Key, Rt. Hon. C. W.
Proctor, W. T.
Tomney, Frank


Lee, Frederick (Newton)
Pursey, Cmdr. Harry
Ungoed-Thomas, Sir Lynn


Lipton, Marcus
Randall, Harry
Wainwright, Edwin


Logan, David
Rankin, John
Warbey, William


Loughlin, Charles
Reid, William
Watkins, Tudor


Mabon, Dr. J. Dickson
Rhodes, H.
Weitzman, David


McCann, John
Roberts, Albert (Normanton)
Wells, Percy (Faversham)


MacColl, James
Roberts, Goronwy (Caernarvon)
Wells, William (Walsall, N.)


McInnes, James
Robinson, Kenneth (St. Pancras, N.)
Wheeldon, W. E.


McKay, John (Wallsend)
Rogers, G. H, R. (Kensington, N.)
Willey, Frederick


Mackie, John
Ross, William
Williams, D. J. (Neath)


McLeavy, Frank
Royle, Charles (Salford, West)
Williams, Rev. LI. (Abertillery)


Mahon, Simon
Shinwell, Rt. Hon. E.
Williams, W. R. (Openshaw)


Mallalieu, J. P. W. (Huddersfield, E.)
Short, Edward
Willis, E. G. (Edinburgh, E.)


Manuel, A. C.
Silverman, Julius (Aston)
Winterbottom, R. E.


Mason, Roy
Silverman, Sydney (Nelson)
Woodburn, Rt. Hon. A.


Mayhew, Christopher
Slater, Mrs. Harriet (Stoke N.)
Woof, Robert


Melish, R. J.
Slater, Joseph (Sedgefield)
Yates, Victor (Ladywood)


Mendelson, J. J.
Small, William
Zilliacus, K.


Millan, Bruce
Smith, Ellis, (Stoke s.)



Mitchison, G. R.
Snow, Julian
TELLERS FOR THE NOES:




Dr. Broughton and Mr. Redhead

Clause ordered to stand part of the Bill.

Clause 45.—(PENALTY FOR NEGLIGENTLY MAKING INCORRECT RETURNS, ETC.)

Amendment proposed: In page 40, line 3, at beginning insert "twice".—[Mr. Roy Jenkins.]

Question put, That "twice" be there inserte:—

The Committee divided: Ayes 168, Noes 248.

Division No. 102.]
AYES
[6.29 p.m.


Abse, Leo
Deer, George
Hughes, Hector (Aberdeen, N.)


Ainsley, William
Delargy, Hugh
Hunter, A. E.


Altaun, Frank (Salford, E.)
Dempsey, James
Hynd, H. (Accrington)


Awbery, Stan
Diamond, John
Irvine, A. J. (Edge Hill)


Bacon, Miss Alice
Dodds, Norman
Janner, Barnett


Baxter, William (Stirlingshire, W.)
Dugdale, Rt. Hon. John
Jay, Rt. Hon. Douglas


Bence, Cyril (Dumbartonshire, E.)
Ede, Rt. Hon. Chuter
Jeger, George


Benson, Sir George
Edelman, Maurice
Jenkins, Roy (Stechford)


Blyton, William
Edwards, Robert (Bilston)
Johnson, Carol (Lewisham, S.)


Bowden, Herbert W. (Leics, S.W.)
Edwards, Walter (Stepney)
Johnston, Douglas (Paisley)


Bowles, Frank
Evans, Albert
Jones, Jack (Rotherham)


Boyden, James
Fitch, Alan
Jones, J. Idwal (Wrexham)


Brown, Alan (Tottenham)
Fletcher, Eric
Jones, T. W. (Merioneth)


Brown, Thomas (Ince)
Forman, J, C.
Kenyon, Clifford


Butler, Herbert (Hackney, C.)
Fraser, Thomas (Hamilton)
Key, Rt. Hon. C. W.


Butler, Mrs. Joyce (Wood Green)
George, Lady Megan Lloyd
Lee, Frederick (Newton)


Chapman, Donald
Ginsburg, David
Lipton, Marcus


Chetwynd, George
Greenwood, Anthony
Logan, David


Cliffe, Michael
Griffiths, W. (Exchange)
Loughlin, Charles


Corbet, Mrs. Freda
Hall, Rt. Hn. Glenvil (Colne Valley)
Mabon, Dr. J. Dickson




McCann, John


Craddock, George (Bradford, S.)
Hamilton, William (West Fife)
MacColl, James


Cronin, John
Hart, Mrs. Judith
McInnes, James


Crosland, Anthony
Hayman, F. H.
McKay, John (Wallsend)


Cullen, Mrs. Alice
Hilton, A. V.
Mackie, John


Darling, George
Holman, Percy
McLeavy, Frank


Davies, C. Elfed (Rhondda, E.)
Houghton, Douglas
Mahon, Simon


Davies, Harold (Leek)
Howell, Charles A.
Mallalieu, J.P.W.(Huddersfield, E.)


Davies, Ifor (Cower)
Hughes, Cledwyn (Anglesey)
Manuel, A. C.


Davits, S. O. (Merthyr)
Hughes, Emrys (S. Ayrshire
Mason, Roy




Mayhew, Christopher
Reid, William
Thomas, George (Cardiff, W.)


Mellish, R. J.
Roberts, Albert (Normanton)
Thomas, Iorwerth (Rhondda, W.)


Mendelson, J. J.
Roberts, Goronwy (Caernarvon)
Thompson, Or. Alan (Dunfermline)


Millan, Bruce
Robinson, Kenneth (St. Panoras, N.)
Thomson, G. M. (Dundee, E.)


Mitchison, G. R.
Rogers, G. H. R. (Kensington, N.)
Thornton, Ernest


Monslow, Walter
Ross, William
Tomney, Frank


Morris, John
Royle, Charles (Salford, West)
Ungoed-Thomas, Sir Lynn


Mort, D. L.
Shinwell, Rt. Hon. E.
Wainwright, Edwin


Moyle, Arthur
Short, Edward
Warbey, William


Neal, Harold
Silverman, Julius (Aston)
Watkins, Tudor


Noel-Baker, Francis (Swindon)
Silverman, Sydney (Nelson)
Weitzman, David


Noel-Baker, Rt. Hn. Philip (Derby, S.)
Slater, Mrs. Harriet (Stoke, N.)
Wells, Percy (Faversham)


Oliver, G. H.
Slater, Joseph (Sedgefield)
Wells, William (Walsall, N.)


Oswald, Thomas
Small, William
Wheeldon, W. E.


Owen, Will
Smith, Ellis (Stoke, S.)
Willey, Frederick


Panned, Charles (Leeds, W.)
Sorensen, R. W.
Williams, D. J. (Neath)


Pargiter, C. A.
Soskice, Rt. Hon. Sir Frank
Williams, Rev. Ll. (Abertillery)


Paton, John
Spriggs, Leslie
Williams, W. R. (Openshaw)


Pavitt, Laurence
Steele, Thomas
Willis, E. G. (Edinburgh, E.)


Pearson, Arthur (Pontypridd)
Stewart, Michael (Fulham)
Winterbottom, R. E.


Peart, Frederick
Stonehouse, John
Woodburn, Rt. Hon. A.


Pentland, Norman
Stones, William
Woof, Robert


Prentice, R. E.
Strachey, Rt. Hon. John
Yates, Victor (Ladywood)


Price, J. T. (Westhoughton)
Stress, Dr. Barnet (Stoke-on-Trent, C.)
Zilliacus, K.


Proctor, W. T.
Summerskill, Dr. Rt. Hon. Edith



Pursey, Cmdr, Harry
Swingler, Stephen
TELLERS FOR THE AYES:


Randall, Harry
Sylvester, George
Dr. Broughton and Mr. Redhead.


Rankin, John
Taylor, Bernard (Mansfield)





NOES


Aitken, W. T.
Critchley, Julian
Hopkins, Alan


Allason, James
Curran, Charles
Hornby, R. P.


Alport, C. J. M.
Currie, G. B. H.
Hornsby-Smith, Rt. Hon. Patricia


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Dalkeith, Earl of
Howard, Gerald (Cambridgeshire)


Ashton, Sir Hubert
d'Avigdor-Goldsmid, Sir Henry
Howard, John (Southampton, Test)


Atkins, Humphrey
Deedes, W. F.
Hughes-Young, Michael


Balniel, Lord
de Ferranti, Basil
Hutchison, Michael Clark


Barber, Anthony
Digby, Simon Wingfield
Iremonger, T. L.


Barlow, Sir John
Donaldson, Cmdr. C. E. M.
Irvine, Bryant Godman (Rye)


Barter, John
Dray son, G. B.
Jackson, John


Batsford, Brian
du Cann, Edward
James, David


Baxter, Sir Beverley (Southgate)
Duthie, Sir William
Jenkins, Robert (Dulwich)


Beamish, Col. Tufton
Emery, Peter
Jennings, J. C.


Bell, Ronald (S. Bucks.)
Emmet, Hon. Mrs. Evelyn
Johnson, Dr. Donald (Carlisle)


Bennett, F. M. (Torquay)
Errington, Sir Eric
Johnson, Eric (Blackley)


Bennett, Dr. Reginald (Gos &amp; Fhm)
Farey-Jones, F. W.
Joseph, Sir Keith


Berkeley, Humphry
Fell, Anthony
Kerans, Cdr. J. S.


Bevins, Rt. Hon. Reginald (Toxteth)
Finlay, Graeme
Kerby, Capt. Henry


Bidgood, John C.
Fisher, Nigel
Kerr, Sir Hamilton


Biggs-Davison, John
Forrest, George
Kimball, Marcus


Birch, Rt. Hon. Nigel
Fraser, Hn. Hugh (Stafford &amp; Stone)
Kitson, Timothy


Bishop, F. P.
Fraser, Ian (Plymouth, Sutton)
Lambton, Viscount


Bossom, Clive
Freeth, Denzil
Langford-Holt, J.


Bourne-Arton, A.
Gammans, Lady
Leavey, J. A.


Bowen, Roderic (Cardigan)
Gardner, Edward
Leburn, Gilmour


Box, Donald
Glyn, Dr. Alan (Clapham)
Legge-Bourke, Maj. H.


Boyle, Sir Edward
Glyn, Sir Richard (Dorset, N.)
Lewis, Kenneth (Rutland)


Braine, Bernard
Godber, J. B.
Linstead, Sir Hugh


Brewis, John
Goodhew, Victor
Litchfield, Capt. John


Brooke, Ht. Hon. Henry
Cower, Raymond
Longden, Gilbert


Brooman-White, R.
Grant, Rt. Hon. William (Woodside)
Loveys, Walter H.


Browne, Percy (Torrington)
Grant-Ferris, Wg. Cdr. R. (Nantwich)
Lucas, Sir Jocelyn (Portsmouth, S.)


Bullard, Denys
Green, Alan
Lucas-Tooth, Sir Hugh


Burden, F. A
Grimond, J.
McAdden, Stephen


Butcher, Sir Herbert
Grimston, Sir Robert
MacArthur, Ian


Campbell. Sir David (Belfast, S.)
Hall, John (Wycombe)
McLaren, Martin


Carr, Compton (Barons Court)
Hamilton, Michael (Wellingborough)
McLaughlin, Mrs. Patricia


Carr, Robert (Mitcham)
Harris, Reader (Heston)
Maclay, Rt. Hon. John


Gary, Sir Robert
Harrison, Brian (Maldon)
Maclean, Sir Fitzroy (Bute&amp;N. Ayrs.)


Channon, H. P. G.
Harrison, Col. J. H. (Eye)
McMaster, Stanley R.


Chataway, Christopher
Harvie Anderson, Miss
Maginnis, John E.


Clark, Henry (Antrim, N.)
Hay, John
Manningham-Buller, Rt. Hn. Sir R.


Clark, William (Nottingham, S.)
Heald, Rt. Hon. Sir Lionel
Markham, Major Sir Frank


Clarke, Brig. Terence (Portsmth, W.)
Henderson, John (Cathcart)
Marlowe, Anthony


Cleaver, Leonard
Hendry, Forbes
Marshall, Douglas


Collard, Richard
Hicks Beach, Maj. W.
Marten, Neil


Cooke, Robert
Hill, Mrs. Eveline (Wythenthawe)
Matthews, Gordon (Meriden)


Cooper, A. E.
Hill, J. E. B. (S. Norfolk)
Mawby, Ray


Cooper-Key, Sir Neill
Hinchingbrooke, Viscount
Maydon, Lt.-Cmdr. S. L. C.


Cordeaux, Lt.-Col. J. K.
Hirst, Geoffrey
Montgomery, Fergus


Cordle, John
Hocking, Philip N.
Morrison, John


Corfield, F. V.
Holland, Philip
Mott-Radclyffe, Sir Charles


Costain, A. P.
Hollingworth, John
Nabarro, Gerald


Coulson, J. M.
Hope, Rt. Hon. Lord John
Neave, Airey







Nicholls, Harmar
Ridley, Hon. Nicholas
Thompson, Richard (Croydon, S.)


Nicholson, Sir Godfrey
Ridsdale, Julian
Thorneycroft, Rt. Hon. Peter


Noble, Michael
Roberts, Sir Peter (Heeley)
Thornton Kemsley, Sir Colin


Oakshott, Sir Hendrie
Roots, William
Tiley, Arthur (Bradford, W.)


Orr-Ewing, C. Ian
Ropner, Col. Sir Leonard
Tilney, John (Wavertree)


Osborn, John (Hallam)
Scott-Hopkins, James
Turton, Rt. Hon. R. H


Osborn, Cyril (Louth)
Shaw, M.
Tweedsmuir, Lady


Page A. J. (Harrow, West)
Shepherd, William
van Straubenzee, W. R.


Page, Graham
Simon, Sir Jocelyn
Vaughan-Morgan, Sir John


Pannell, Norman (Kirkdale)
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Wade, Donald


Partridge, E.
Smyth, Brig. Sir John (Norwood)
Wakefield, Edward (Derbyshire, W.)


Pearson, Frank (Clitheroe)
Speir, Rupert
Wakafield, Sir Wavell (St. M'lebone)


Peel, John
Stevens, Geoffrey
Wall, Patrick


Percival, Ian
Steward, Harold (Stockport, S.)
Ward, Dame Irene (Tynemouth)


Peyton, John
Stodart, J. A.
Watts, James


Pickthorn, Sir Kenneth
Stoddart-Soott, Col. Sir Maloim
Wells, John (Maidstone)


Pike, Miss Mervyn
Storey, Sir Samuel
Whitelaw, William


Pilkington, Capt. Richard
Studholme, Sir Henry
Williams, Dudley (Exeter)


Pitman, I. J.
Summers, Sir Spencer (Aylesbury)
Wills, Sir Gerald (Bridgwater)


Pitt, Miss Edith
Sumner, Donald (Orpington)
Wilson, Geoffrey (Truro)


Pott, Percivall
Talbot, John E.
Wise, A. R.


Powell, J. Enoch
Tapsell, Peter
Wolrige-Gordon, Patrick


Prior-Palmer, Brig. Sir Otho
Taylor, Sir Charles (Eastbourne)
Wood, Rt. Hon. Richard


Proudfoot, Wilfred
Taylor, W. J. (Bradford, N.)
Woodhouse, C. M.


Ramsden, James
Teeling, William
Woodnutt, Mark


Rawlinson, Peter
Temple, J.
Woollam, John


Redmayne, Rt. Hon. Martin
Thatcher, Mrs. Margaret
Yates, William (The Wrekin)


Rees, Hugh
Thomas, Leslie (Canterbury)



Rees-Davies, W. R.
Thomas, Peter (Conway)
TELLERS FOR THE NOES:


Renton, David
Thompson, Kenneth (Walton)
Mr. Legh and Mr. Sharples

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Stevens: I do not quite know, Mr. Blackburn, whether to raise the point that I have in mind on this Motion or on the Motion that Clause 46 stand part of the Bill. Clauses 44, 45 and 46 hang together.
Clause 44 provides a penalty for fraudulently making an incorrect return of

(i) fifty pounds; and
(ii) twice the amount of the difference specified in subsection (1) of section forty-six of this Act."
Clause 45 specifies the penalty for negligently making incorrect returns, which is £50 plus
the amount of the difference specified in subsection (1) of section forty-six of this Act.
In Clause 46 we find the yardstick against which the penalty is measured. The amount of the penalty in respect of fraud and negligence is the same. In one case it is once the base and in the other case twice the base, but the base is the total amount of tax falling short of the amount of tax which should have been paid.
Under Clause 44 a taxpayer may have fraudulently omitted part of his income and therefore pays twice the total tax which should have been paid. If in the same return in respect of another type of income he has negligently omitted part of his income, he will pay, not

once the tax omitted negligently, but once the tax which has not been paid.
Taking these three Clauses together, it seems to me that, in respect of the same return, a taxpayer may be called upon to pay a penalty of three times the total tax, once in respect of negligence and twice in respect of fraud. I do not think that my right hon. Friend the Chancellor of the Exchequer had that in mind. I should like the point to be clarified.
An Amendment to Clause 45 was tabled which sought to clarify the position, but, in the wisdom of the Chair, it was not selected, and I therefore raise the point on the Question, "That the Clause stand part of the Bill." If what I have pointed out was not intended, I think that it should be made perfectly plain.

The Attorney-General: I think that my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) is under a misapprehension. I certainly do not think that the consequences which he suggests could arise. First, the offence under Clause 44 is of delivering fraudulently an incorrect return. A person does not become liable to a separate penalty for each incorrect entry in the return. If there are three incorrect items in the return and they have all been fraudulently entered, one does not become liable to a penalty of £150 and six times the amount of the difference. The return itself would be a fraudulent


return and the penalty would be that prescribed by Clause 44. That is the maximum. I emphasise that because my hon. Friend said, more than once, that, where a taxpayer was guilty of conduct bringing him within Clause 44, he would have to pay £50 and twice the amount. That is not so. That is the maximum, and the amount would be settled by the court either initially or on appeal.
The point which is worrying my hon. Friend, apparently, is the case where, in the same return, there is a fraudulent entry and a negligent entry. I should have thought that it would be very remarkable to find fraud accompanied by negligence in the same return. It is a difficult hypothetical case for one to consider, but I can conceive of a case where the Revenue may proceed, first, for fraud, and secondly, in the alternative, for negligence on the basis that it might or might not succeed in establishing fraud. If it proceeded in that way in relation to a certain return, it would be for the court to determine which was established and then the penalty either for fraud or negligence would be incurred and assessed.
Again, it is a maximum penalty. I do not see the least likelihood of proceedings for negligence and fraud in relation to the same return, and consequently, I do not think that there is the slightest possibility of these penalty provisions being cumulative in respect of the same returns. I will certainly consider the point again between now and the Report stage, but I think that there is no ground for my hon. Friend's fears.

Question put and agreed to

Clause ordered to stand part of the Bill.

Clause 46 ordered to stand part of the Bill.

Clause 47.—(AIDING AND ABETTING OF FRAUDLENT PRACTICES.)

6.45 p.m.

The Solicitor-General: I beg to move, in page 40, line 41, to leave out from

"who" to "accounts" in line 42 and to insert:
assists in or induces the making or delivery for any purposes of income tax of any".

Perhaps it would be convenient to take with this Amendment that in page 40, line 43.

The Deputy-Chairman (Major Sir William Anstruther-Gray): Yes.

The Solicitor-General: The purpose of these Amendments is to make it perfectly clear that a person Who assists another in making an incorrect return or claim for relief, or in submitting incorrect accounts, will not be liable to a penalty under the Clause unless he knows that the return, etc., is incorrect. The Clause as drawn has that effect, but we thought it right to make the matter absolutely clear by tabling the Amendments, which are to the same effect as those tabled by hon. Members on both sides.

Mr. Mitchison: I should like to thank the Solicitor-General for expressing in 22 words what we said in one. We put our one first, but no doubt the hon. and learned Gentleman was more conscious that this is the cricket season.

Mr. Hirst: I should like to join in what the hon. and learned Member for Kettering (Mr. Mitchison) has said, although my Amendment was not limited to one word. We are grateful to my hon. and learned Friend for what has has done.

Amendment agreed to.

Further Amendment made: In page 40, line 43, leave out "for any purposes of income tax" and insert:
which he knows to be incorrect".—[The Solicitor-General.]

Amendment proposed: In page 40, line 44, leave out "five hundred" and insert "one thousand".—[Mr. Mitchison.]

Question put, That "five hundred" stand part of the Clause:—

The Committee divided: Ayes 238, Noes 165.

Division No. 103.]
AYES
[6.49 p.m.


Aitken, W. T.
Barlow, Sir John
Berkeley, Humphry


Allason, James
Barter, John
Bevins, Rt. Hon. Reginald (Toxteth)


Alport, C. J. M.
Batsford, Brlan
Bidgood, John C.


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Baxter, Sir Beverley (Southgate)
Birch, Rt. Hon. Nigel


Ashton, Sir Hubert
Beamish, Col Tufton
Bishop, F. P


Atkins, Humphrey
Bell, Ronald (S. Bucks.)
Bossom, Clive


Balniel, Lord
Bennett, F. M. (Torquay)
Bourne-Arton, A.


Barber, Anthony
Bennett, Dr. Reginald (Gos &amp; Fhm)
Bowen, Roderic (Cardigan)




Box, Donald
Hocking, Philip N.
Pickthorn, Sir Kenneth


Boyle, Sir Edward
Holland, Philip
Pike, Miss Mervyn


Braine, Bernard
Hollingworth, John
Pilkington, Capt. Richard


Brewis, John
Hope, Rt. Hon. Lord John
Pitman, I. J.


Brooke, Rt. Hon. Henry
Hopkins, Alan
Pitt, Miss Edith


Brooman-White, R.
Hornby, R. P.
Pott, Percivall


Browne, Percy (Torrington)
Hornsby-Smith, Rt. Hon. Patricia
Powell, J. Enoch


Bullard, Denys
Howard, Gerald (Cambridgeshire)
Prior-Palmer, Brig. Sir Otho


Burden, F.A.
Howard, John (Southampton, Test)
Proudfoot, Wilfred


Butcher, Sir Herbert
Hughes-Young, Michael
Ramsden, James


Butler, Rt. Hn. R. A. (Saffron Walden)
Hutchison, Michael Clark
Rawlinson, Peter


Carr, Compton (Barons Court)
Iremonger, T. L.
Redmayne, Rt. Hon. Martin


Carr, Robert (Mitcham)
Irvine, Bryant Godman (Rye)
Rees, Hugh


Cary, Sir Robert
Jackson, John
Rees-Davies, W. R.


Channon, H.P.G.
James, David
Renton, David


Chataway, Christopher
Jenkins, Robert (Dulwich)
Ridley, Hon. Nicholas


Clark, Henry (Antrim, N.)
Jennings, J. C.
Ridsdale, Julian


Clark, William (Nottingham, S.)
Johnson, Dr. Donald (Carlisle)
Roberts, Sir Peter (Heeley)


Clarke, Brig Terence (Portsmth, W.)
Johnson, Eric (Blackley)
Roots, William


Cleaver, Leonard
Joseph, Sir Keith
Ropner, Col. Sir Leonard


Collard, Richard
Kerans, Cdr. J. S.
Scott-Hopkins, James


Cooke, Robert
Kerby, Capt. Henry
Sharples, Richard


Cooper, A. E.
Kerr, Sir Hamilton
Shaw, M.


Cordeaux, Lt.-Col. J. K.
Kimball, Marcus
Shepherd, William


Cordle, John
Kitson, Timothy
Simon, Sir Jocelyn


Corfield, F. V.
Lambton, Viscount
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Costain, A. P.
Langford-Holt, J.
Smyth, Brig. Sir John (Norwood)


Coulson, J. M
Leavey, J. A.
Speir, Rupert


Curran, Charles
Leburn, Gilmour
Stevens, Geoffrey


Currie, G. B. H.
Legge-Bourke, Mal. H.
Steward, Harold (Stockport, S.)


Dalkeith, Earl of
Legh, Hon. Peter (Petersfield)
Stodart, J. A.


d'Avigdor-Goldsmid, Sir Henry
Lewis, Kenneth (Rutland)
Stoddart-Scott, Col. Sir Malcolm


Deedes, W.F.
Linstead, Sir Hugh
Storey, Sir Samuel


de Ferranti, Basil
Litchfield, Capt. John
Studholme, Sir Henry


Digby, Simon Wingfield
Longden, Gilbert
Summers, Sir Spencer (Aylesbury)


Donaldson, Cmdr. C. E. M.
Loveys, Walter H.
Sumner, Donald (Orpington)


Drayson, G. B.
Lucas, Sir Jocelyn (Portsmouth, S.)
Talbot, John E.


du Cann, Edward
Lucas-Tooth, Sir Hugh
Tapsell, Peter


Duthie, Sir William
McAdden, Stephen
Taylor, Sir Charles (Eastbourne)


Emery, Peter
MacArthur, Ian
Teeling, William


Emmet, Hon. Mrs. Evelyn
McLaren, Martin
Temple, John M.


Errington, Sir Eric
McLaughlin, Mrs. Patricia
Thatcher, Mrs. Margaret


Farey-Jones, F.W.
Maclay, Rt. Hon. John
Thomas, Leslie (Canterbury)


Finlay, Graeme
Maclean, Sir Fitzroy (Bute&amp;N. Ayrs.)
Thomas, Peter (Conway)


Fisher, Nigel
McMaster, Stanley R.
Thomson, Kenneth (Walton)


Forrest, George
Maginnis, John E.
Thompson, Richard (Croydon, S.)


Fraser, Ian (Plymouth, Sutton)
Manningham-Buller, Rt. Hn Sir R.
Thorneycroft, Rt. Hon. Peter


Freeth, Denzil
Markham, Major Sir Frank
Thomton-Kemsley, Sir Colin


Gammans, Lady
Marlowe, Anthony
Tiley, Arthur (Bradford, W.)


Gardner, Edward
Marshall, Douglas
Tilney, John (Wavertree)


Glyn, Dr. Alan (Clapham)
Marten, Neil
Turton, Rt. Hon. R. H.


Glyn, Sir Richard (Dorset, N.)
Matthews, Gordon (Meriden)
Tweedsmuir, Lady


Godber, J. B.
Mawby, Ray
van Straubenzee, W.R.


Goodhew, Victor




Gower, Raymond
Maydon, Lt. Cmdr. S. L. G.
Wade, Donald


Grant, Rt. Hon William (Woodside)
Montgomery, Fergus
Wakefield, Edward (Derbyshire, W.)


Grant-Ferris, Wg Cdr. R.(Nantwich)
Morgan, William
Wakefield, Sir Wavell (St. M'lebone)


Green, Alan
Morrison, John
Wall, Patrick


Grimond, J.
Nabarro, Gerald
Ward, Dame Irene (Tynemouth)


Grimston, Sir Robert
Neave, Alrey
Watts, James


Hall, John (Wycombe)
Nicholson, Sir Godfrey
Wells, John (Maidstone)


Hamilton, Michael (Wellingborough)
Noble, Michael
Williams, Dudley (Exeter)


Harris, Reader (Heston)
Orr-Ewing, C. Ian
Wills, Sir Gerald (Bridgwater)


Harrison, Brian (Maidon)
Osborn, John (Hallam)
Wilson, Geoffrey (Truro)


Harrison, Col. J. H. (Eye)
Osborne, Cyril (Louth)
Wise, A. R.


Harvie Anderson, Miss
Page, A. J.(Harrow, West)
Wolrige-Gordon, Patrick


Hay, John
Page, Graham (Crosby)
Wood, Rt. Hon. Richard


Heald, Rt. Hon, Sir Lionel
Pannell, Norman (Kirkdale)
Woodhouse, C. M.


Henderson, John (Cathcart)
Partridge, E.
Woodnutt, Mark


Hendry, Forbes
Pearson, Frank (Clitheroe)
Woollam, John


Hicks Beach, Maj. W.
Peel, John



Hill, Mrs. Eveline (Wythenshawe)
Percival, Ian
TELLERS FOR THE AYES:


Hirst, Geoffrey
Peyton, John
Mr. J. E. B. Hill and Mr. Whitelaw.




NOES


Abse, Leo
Boyden, James
Corbet, Mrs. Freda


Ainsley, William
Brown, Alan (Tottenham)
Craddock, George (Bradford, S.)


Awbery, Stan
Brown, Thomas (Ince)
Crosland, Anthony


Bacon, Miss Alice
Butler, Herbert (Hackney, C.)
Cullen, Mrs. Alice


Baxter, William (Stirlingshire, W.)
Butler, Mrs. Jovce (Wood Green)
Darling, George


Bence, Cyril (Dunbartonshire, E.)
Callaghan, James
Davies, G. Elfed (Rhondda, E.)


Benson, Sir George
Chapman, Donald
Davies, Harold (Leek)


Blyton, William
Chetwynd, George
Davies, Ifor (Gower)


Bowden, Herbert W. (Leics, S. W.)
Cliffe, Michael
Davies, S. O. (Merthyr)







Deer, George
Loughlin, Charles
Short, Edward


Delargy, Hugh
Mabon, Dr. J. Dickson
Silverman, Julius (Aston)


Dempsey, James
McCann, John
Silverman, Sydney (Nelson)


Diamond, John
MacColl, James
Skeffington, Arthur


Dodds, Norman
McInnes, James
Slater, Mrs. Harriet (Stoke, N.)


Dugdale, Rt. Hon. John
McKay, John (Wailsend)
Slater, Joseph (Sedgefield)


Ede, Rt. Hon. Chuter
Mackie, John
Small, William


Edwards, Robert (Bilston)
McLeavy, Frank
Smith, Ellis (Stoke, S.)


Edwards, Walter (Stepney)
Mahon, Simon
Sorensen, R. W.


Evans, Albert
Manuel, A. C.
Soskice, Rt. Hon. Sir Frank


Fitch, Alan
Mason, Roy
Spriggs, Leslie


Fletcher, Eric
Mayhew, Christopher
Steele, Thomas


Forman, J.C.
Mellish, R. J.
Stonehouse, John


Fraser, Thomas (Hamilton)
Mendelson, J. J.
Stones, William


Gaitskell, Rt. Hon. Hugh
Millan, Bruce
Strachey, Rt. Hon. John


George, J. C. (Pollok)
Mitchison, G. R.
Stross, Dr. Barnett(Stoke-on-Trent, C.)


Ginsburg, David
Monslow, Walter
Summerskill, Dr. Rt. Hon. Edith


Greenwood, Anthony
Morris, John
Sylvester, George


Griffiths, W. (Exchange)
Mort, D. L.
Taylor, Bernard (Mansfield)


Hall, Rt. Hon. Glenvil (Colne Valley)
Moyle, Arthur
Thomas, George (Cardiff, W.)


Hamilton, William (West Fife)
Neal, Haroid
Thomas, Iorwerth (Rhondda, W.)


Hannan, William
Noel-Baker, Francis (Swindon)
Thompson, Dr. Alan (Dunfermline)


Hart, Mrs. Judith
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Thornton, Ernest


Hayman, F. H.
Oliver, G. H.
Tomney, Frank


Herbison, Miss Margaret
Oswald, Thomas
Ungoed-Thomas, Sir Lynn


Hilton, A. V.
Owen, Will
Wainwright, Edwin


Holman, Percy
Padley, W. E.
Warbey, William


Houghton, Douglas
Pannell, Charles (Leeds, W.)



Howell, Charles A.
Pargiter, G. A.
Watkins, Tudor


Hughes, Cledwyn (Anglesey)
Paton, John
Weitzman, David


Hughes, Emrys (S. Ayrshire)
Pavitt, Laurence
Wells, Percy (Faversham)


Hughes, Hector (Aberdeen, N.)
Pearson, Arthur (Pontypridd)
Wells, William (Walsall, N.)


Hunter, A. E.
Peart, Frederick
Wheeldon, W. E.


Hynd, H. (Accrington)
Pentland, Norman
White, Mrs. Eirene


Irvine, A. J. (Edge Hill)
Prentice, R. E.
Willey, Frederick


Janner, Barnett
Price, J. T. (Westhoughton)
Williams, D. J. (Neath)


Jay, Rt. Hon. Douglas
Proctor, W. T.
Williams, Rev. LI. (Abertillery)


Jenkins, Roy (Stechford)
Pursey, Cmdr. Harry
Williams, W. R. (Openshaw)


Johnston, Douglas (Paisley)
Randall, Harry
Willis, E. G. (Edinburgh, E.)


Jones, Jack (Rotherham)
Rankin, John
Wilson, Rt. Hon. Harold (Huyton)


Jones, J. Idwal (Wrexham)
Roberts, Albert (Normanton)
Winterbottom, R. E.


Jones, T. W. (Merioneth)
Roberts, Coronwy (Caernarvon)
Woodburn, Rt. Hon. A.


Kenyon, Clifford
Robinson, Kenneth (St. Pancras, N.)
Woof, Robert


Key, Rt. Hon. C. W.
Rogers, G. H. R. (Kensington, N.)
Yates, victor (Ladywood)


Lee, Frederick (Newton)
Ross, William
Zilliacus, K.


Lipton, Marcus
Royle, Charles (Salford, West)



Logan, David
Shinwell, Rt. Hon E.
TELLERS FOR THE NOES:




Dr. Broughton and Mr. Redhead.

Clause, as amended, ordered to stand part of the Bill.

Clause 48.—(TIME LIMIT FOR RECOVERY FROM TAXPAYER OF TAX LOST THROUGH HIS FAULT.)

Amendment made: In page 42, line 1, after "next", insert "if any".—[Mr. Barber.]

Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. Stevens: Unlike other hon. Members of the Committee, I have found the Clause a little difficult to interpret. I am not entirely certain even now that I am completely satisfied about its exact meaning. In an earlier debate, my right hon. and learned Friend the Attorney-General suggested that I was still under a misapprehension. As I understand the position at the moment, where a taxpayer negligently omits part of his income from his Income Tax return, the Inland Revenue can, without further

action, go back six years if he has been negligent in those earlier years.
7.0 p.m.
It seems to me that the Clause will change that practice and that if in any of those six years evidence of negligence is apparent, the Inland Revenue has the right to attach another six years. That means that if the negligence is in the current year, the Inland Revenue can go back in the current year to one year, which means seven years, and if it is in the current year but one, it can go back eight years, and so on. If I am wrong in my interpretation, I should be glad if it could be made perfectly plain that the six years' limit for negligence will stand as it is at present after the Clause becomes law.

The Economic Secretary to the Treasury (Mr. Anthony Barber): It is perfectly correct that the six years' limit for negligence stands, but not quite in the same way as it did before the Bill. As my hon. Friend


realises, the way in which it works is that where an assessment has been made in any year within the six-year time limit to recover tax lost owing to the taxpayer's fraud, wilful default or negligence, an assessment can be made to recover tax lost owing to negligence in another year which ended not more than six years earlier than that. Where an assessment has been made in any such earlier year, an assessment may be made for a still earlier year provided that it is not more than six years earlier, and so on.
But there is the important safeguard, which my hon. Friend will have seen in the Clause, that an assessment cannot be made under the Clause for a year ending more than six years before the end of the normal year—the normal year being defined in the Clause as a year within the first six years—one cannot go back beyond six years before the normal year unless application has been made to the General or the Special Commissioners.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clauses 49 to 51 ordered to stand part of the Bill.

Clause 52.—(PROCEDURE FOR RECOVERY OF FINES AND PENALTIES.)

The Solicitor-General: I beg to move, in page 43, line 37, to leave out paragraph (a) and to insert:
(a) in England, Wales or Northern Ireland, in the High Court.
It will be convenient to take also with this the Amendment in page 43, line 40. These are drafting Amendments intended to make the effect of the Clause more obvious.

Amendment agreed to.

Further Amendment made: In page 43, line 40, leave out from "Scotland" to end of line 43 and insert:
and any proceedings commenced as mentioned in paragraph (a) of this subsection shall be deemed to be civil proceedings by the Crown within the meaning of Part II of the Crown Proceedings Act, 1947, or, as the case may be, that Part as for the time being in force in Northern Ireland".—[The Solicitor-General.]

Clause, as amended, ordered to stand part of the Bill.

Clause 53 ordered to stand part of the Bill.

Clause 54.—(INTEREST ON TAX RECOVERED TO MAKE GOOD LOSS DUE TO TAX PAYER'S FAULT.)

Mr. Barber: I beg to move, in page 45, line 28, at the end to insert:
(5) A certificate by the General or Special Commissioners that the tax or a specified part of the tax charged by an assessment specified in the certificate carries interest under this section from a date so specified shall be sufficient evidence of that fact in proceedings for the recovery of that interest.
(6) A certificate under subsection (5) of this section shall not be given except on the application of the surveyor or a person nominated for that purpose by the Commissioners of Inland Revenue, and on any such application the person charged by the assessment (or, if he has died, his personal representatives) shall be entitled to appear and be heard.
The Amendment enables an inspector of taxes or another person nominated by the Commissioners of Inland Revenue to apply to the General or Special Commissioners for a certificate that tax charged by assessment, or a specified part of the tax, carries interest under the Clause. Under the Amendment, the Revenue will be entitled in future, before starting recovery proceedings, to apply to the Commissioners concerned for a certificate that the assessment carries interest. The taxpayer will be entitled to appear and to be heard on such application and the certificate will then rank as prima facie evidence of the facts stated in it, but not as conclusive evidence. It will be open to the taxpayer, if he wants, to question this procedure in any court proceedings.

Mr. Houghton: My only comment is that it seems to be a lot of procedure and apparatus just to get interest at 3 per cent.

Amendment agreed to.

Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. Houghton: On this question of 3 per cent., I thought that interest rates were going up and that house purchasers are having to pay more than 3 per cent. The Bank Rate has been put up and hire-purchase restrictions have been imposed. Is it not time to ask people who have been withholding their tax to pay a little more in interest? I know that this is tied up with the rate of interest chargeable under Section 495 of the Income Tax Act, 1952, but there is


no reason why both should not go up and no reason why this should not be higher, even though the other remains at 3 per cent.
The other 3 per cent. is chargeable on tax assessed and remaining unpaid for more than three months after the due date. We will let them get away with that, but there is no reason why persons covered by Part III of the Bill should pay at only 3 per cent. If we let the Clause go without dividing against it, it must not be taken that we approve of 3 per cent. It is time to ask people to pay the current rate of interest on money which they have been withholding and which probably they have been putting to other use, making untaxed profit on it.

Mr. Barber: The hon. Member for Sowerby (Mr. Houghton) is quite right in saying that we are fallowing Section 495 of the Income Tax Act, 1952, but it is fair to say that before including the Provision in the Bill for 3 per cent. interest my right hon. Friend considered what rate of interest would be appropriate in present circumstances. One of the factors which he took into account was that interest paid under these provisions at 3 per cent. is interest from which tax cannot be deducted. Consequently, considering the situation of a person paying Income Tax at the standard rate and fairly heavy Surtax, I hope that the hon. Member for Sowerby will agree that 3 per cent. is not so small.

Mr. Houghton: I do not agree, but we will let it go.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clauses 55 to 57 ordered to stand part of the Bill.

Clause 58.—(INTERPRETATION OF PART III.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Diamond: This is the last Clause of this Part of the Bill dealing with penalties. I wish to draw the attention of the Committee to two newspaper reports dealing with penalties. The first is of a case reported in a local newspaper, the Gloucester Citizen, of a man who claimed an allowance for a dependent relative. He claimed in respect of

his mother for fourteen years after she had died. Proceedings were taken against him before the magistrates and it emerged in evidence that the total amount underpaid was £48 9s. 3d. Quite properly, the matter was referred to quarter sessions. The other case, authoritatively reported in a Glasgow newspaper, concerned a forward stripper when the Inland Revenue lost more than £4 million. The penalty in that case was that the stripper got away with £4 million free of Income Tax and Surtax.

Mr. Harold Wilson: Is the Chancellor to make no comment?

Question put and agreed to.

Clause ordered to stand part of the Bill.

Fifth Schedule agreed to.

Orders of the Day — Sixth Schedule.—(APPLICATION OF PART III TO THE PROFITS TAX.)

Mr. Barber: I beg to move, in page 74, line 1, to leave out from "who" to "return" in line 2 and to insert:
assists in or induces the making or delivery for any purposes of the profits tax of any".
This and the next Amendment, relating to Profits Tax, correspond exactly to my right hon. Friend's Amendments to Clause 47.

Amendment agreed to.

Further Amendment made: In page 74, line 3, leave out: "for any purposes of the profits tax" and insert:
which he knows to be incorrect".—[Mr. Barber.]

Mr. Barber: I beg to move, in page 75, line 7, to leave out paragraph (a) and to insert:
(a) in England, Wales or Northern Ireland, in the High Court.
This and the following Amendment, dealing with Profits Tax, correspond exactly to the Amendment to Clause 52 which the Committee has agreed to.

Amendment agreed to.

Further Amendment made: In page 75, line 10, leave out from "Scotland" to end of line 13 and insert:
and any proceedings commenced as mentioned in paragraph (a) of this sub-paragraph shall be deemed to be civil proceedings by the Crown within the meaning of Part II of the Crown Proceedings Act, 1947, or, as the case may be, that Part as for the time being in force in Northern Ireland".—[Mr. Barber.]

Mr. Barber: I beg to move, in page 76, line 9, at the end to insert:
(4) A certificate by the General or Special Commissioners that the tax or a specified part of the tax charged by an assessment specified in the certificate carries interest under this paragraph from a date so specified shall be sufficient evidence of that fact in proceedings for the recovery of that interest.
(5) A certificate under sub-paragraph (4) of this paragraph shall not be given except on the application of the surveyor or a person nominated for that purpose by the Commissioners of Inland Revenue, and on any such application the person charged by the assessment shall be entitled to appear and be heard.

This Amendment relates to interest on Profits Tax and corresponds with my right hon. Friend's Amendment to Clause 54, which the Committee has accepted.

Amendment agreed to.

Schedule, as amended, agreed to.

Orders of the Day — Clause 59.—(ESTATE DUTY: GRADUATION OF CHARGE ON GIFTS, ETC.)

7.15 p.m.

Mr. Denzil Freeth: I beg to move, in page 47, line 7, to leave out "in the third, fourth or last" and to insert:
after the end of the first".
It may be convenient also to discuss the Amendment in page 47, to leave out lines 11 to 16 and to insert:

(a) by twenty per cent. thereof, if the death take place in the second year,
(b) by forty per cent. thereof, if the death take place in the third year,
(c) by sixty per cent thereof, if the death take place in the fourth year,
(d) by eighty per cent. thereof, if the death take place in the fifth year.

The Deputy-Chairman: Yes, I think that that would be convenient to the Committee.

Mr. Freeth: I begin by congratulating my right hon. Friend the Chancellor of the Exchequer on having put subsection (1) of this Clause into the Bill. I note that the right hon. Member for Huyton (Mr. H. Wilson) and some of his hon. Friends have tabled an Amendment to delete subsection (1), but hon. Members on this side of the Committee will congratulate my right hon. Friend on having included it.
We are grateful to him for so doing, because to most of us it seems thoroughly unjust that one day less in the life of a man can mean that his heirs, to whom

he has made gifts while he was still alive, might have to pay as much as 80 per cent. of the value of the gift compared with no tax at all. While I am grateful to my right hon. Friend for doing something to remove that anomaly, I wonder why he has chosen this way to effect his purpose and not the way that I propose in my second Amendment, the traditional way in which this proposal has been made in previous years by several of my hon. Friends.
A man may make a gift to his heirs for various reasons. He may dislike all taxation and therefore consider it reasonable to avoid paying any which he does not legally have to pay. He may believe that his heirs will spend the money better than the Government would spend it. It may be a desire to keep an estate or something of the sort intact. He may have various reasons for making the gift and some of them may be more laudable than others, but we cannot tax people on their intentions. One has to think in terms of how long before his death a person can make a gift to his heirs with out that gift being an obvious attempt to evade legitimate taxation.
Whatever the motive may be, the one thing which a man cannot do is to foretell or, with the exception of suicide, even arrange the date of his death. One can obviously quote the case of a man dying of cancer who makes a deathbed or near deathbed gift, but, equally, one can think of cases of a person, young and in good health, making a gift to those who might be his heirs and then being run over by a bus, as any of us might be, when crossing the street.
It is because death is by its very nature a matter if not of luck then of uncertain timing at any rate, that one cannot say that there is any particular merit in living any longer than anybody else. I do not believe that my right hon. Friend has chosen the best way to achieve his purpose. It is essential that we should establish some relation between the length of time a person lives after making a gift and the amount of taxation still to be paid on that gift. My right hon. Friend has now provided that there is no relief at all if death occurs in the second year after making the gift. In between the third and fourth years the relief is to be raised from 15 per cent. to 30 per cent., that is, it is to be doubled, and it is to


be doubled again in the fifth year from 30 per cent. to 60 per cent.
Such differentials are not justified by the chance of whether one dies today or tomorrow. It is much fairer to have an arithmetic progression of taxation relief rather than a geometric progression. Attention has been focussed on the principle underlying the subsection by the extreme case of a person dying, say, four years and 364 days after making a gift, that gift under the law as it now stands being liable to taxation at the maximum rate.
My right hon. Friend's proposal would still leave a taxation payment of 40 per cent. of the tax, because relief would be given to only 60 per cent. of the tax. At the maximum rate of Estate Duty, that 40 per cent. could amount to no less than 32 per cent. of the value of the gift. Although that is obviously a much better state of affairs than that now ruling, it is a little unjust and it would be better if we could tail off a progressive reduction in taxation so that there was not so large a difference in the tax which one day's life could make.
It seems to me that the only fair way of granting relief to those unlucky enough to receive gifts from those who have ceased to live in the five years is to spread out the tax remission evenly over the whole of the five years in convenient periods and percentages. In my second Amendment I suggest twelvemonth periods. A difference of 20 per cent. every year of five years is fair and just, because life is uncertain and the date of our deaths is not chosen by ourselves. The Amendment ensures that the greatest amount of tax is paid, as it should be, on gifts made shortly before death in order that one can prevent tax evasion, but equally my Amendment would reduce to as small a percentage as was reasonable the amount of Estate Duty payable on a gift made some four years or more before the donor died.
I commend the Amendments to my right hon. Friend in the hope that he will agree that a gradual arithmetic progression is more suited to the facts of the case than a geometric progression going up in stages which are very large and which in the fifth year of a donor's life still leave a gift liable to tax of no less than 40 per cent. of the amount which would have been paid if the

person had died within a few days of making the gift.

Mr. William Clark: I hope that my right hon. Friend will admit the validity of reducing Estate Duty on a pro rata basis. As my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth) said, there is an anomaly in that if the donor does not live the full period, the whole or part of the reduction is lost. However, I think that the anomaly remains even with my hon. Friend's Amendment and I should prefer the 15 per cent. reduction per year proposed by the Chancellor to be calculated on a calendar monthly basis. Why should it be that in the case of a man who lives for 364 days of the year there should be no reduction whereas, if he lives the extra day, there is a reduction of 15 per cent., 30 per cent., or whatever it may be?
7.30 p.m.
It may be that my hon. Friend's Amendment goes a little too far, in which case I wonder whether my right hon. Friend would consider a proposal that the first twenty months should not be exempt from relief but that every calendar month thereafter should earn a reduction in Estate Duty of 1½ per cent. This would alleviate the anomaly of the yearly rise in the rates. If the changes took place at each calendar month it should be quite easy to work, administratively, and would probably not cost the Revenue any more money.

Mr. Amory: The debate has shown that there is a considerable division of opinion in the Committee about the proper treatment of gifts inter vivos for Estate Duty purposes. My hon. Friend the Member for Basingstoke (Mr. Denzil Freeth) considers that the proposal I have made does not go far enough in graduating the burden of the duty by reference to the length of time which has elapsed between the gift and the donor's death. On the other hand, hon. Members opposite probably take the view that no concession whatever should be made here.
I concede at once that in any code of death duties it is essential to establish some form of protection against the erosion of the yield of the duty by means of gifts inter vivos. There has always been protection of this kind in our Estate


Duty law. The period for which the donor must survive if the gift is to escape Estate Duty has been increased over the years. The present danger period—if I may so call it—of five years has been in force since it was established by the Labour Government in 1946. Whether that is precisely the right length for the danger period is obviously a matter of opinion; at all events, neither the Clause nor my hon. Friend's Amendment has sought to reduce it
It is no part of my purpose, therefore, to dismantle the Revenue's defences in the matter of Estate Duty. On the other hand, there is no doubt that the present rule can give rise to considerable hardship, especially, as my hon. Friend has pointed out, where the death occurs very shortly before the five-year period has elapsed. We can all recall cases of this kind.
On a number of occasions it has been represented to me and to my predecessors that the charge for duty ought to be graduated in some way, within the danger period, by reference to the length of time elapsing between the making of the gift and the donor's death. I came to the conclusion that it is an anomaly in the present law that one day can make all the difference between the full charge of Estate Duty and complete exemption, and I therefore decided that some measure of graduation should be introduced into the charge.
The question was, what would be the best arrangement? My hon. Friend thinks that I have not gone far enough. He made a logical case for going the whole way once we have started on the process of graduation, and my hon. Friend the Member for Nottingham, South (Mr. W. Clark) has asked whether we could not have a more gradually defined process of graduation than even that suggested by my hon. Friend the Member for Basingstoke. I need hardly say that I considered those aspects thoroughly before deciding upon the proposals which are embodied in the Clause. I entirely appreciate the force of the argument, but as Chancellor of the Exchequer I have to look at the other side of the question, namely, the protection of the Revenue.
Weighing both sides of the argument—the need to ease the hardship that can

arise under the present law and the need to protect the Revenue—I came to the conclusion that the best course was an intermediate one which was not too complicated but would pay due regard to both considerations. Under the Clause there is no relief on death for the first two years of the gift. I do not think that that is unreasonable. After that, the relief comes in gradually. In my view the relief, limited in this way, still leaves the Revenue sufficiently protected. At the same time, it goes a considerable way to meet the main anomalies and hardships that can arise under the present law.
I see the force of the points made by my hon. Friends, but I believe that the proposal I have made substantially meets the hardest cases, and it is a simple process of graduation. For the reasons I have given, I would not think it right to go the whole way with my hon. Friend the Member for Basingstoke. I believe that the intermediate position which the Clause takes up is a fair one and represents a reasonable compromise, which will put an end at any rate to a great deal of hardship which has been possible under the present law.

Mr. Denzil Freeth: Can my right hon. Friend make an estimate of how much my Amendment would cost the Revenue, as compared with the subsection as it now stands?

Mr. Amory: From the best calculation that we are able to make, it would cost twice as much as the proposal I have made. But it was not mainly on the ground of cost that I preferred the scheme that I have proposed. I do not think it unreasonable that there should be no abatement if the death occurs within the first two years, but after that the case for a reduction grows steadily stronger.

Mr. Roy Jenkins: I rise in the hope that I may be able to help the Committee to have the best possible debate within the shortest time. It is not the intention of my hon. Friends and myself to have an unduly extensive debate, and we thought it most convenient to put forward our points in the debate on the Question "That the Clause stand part of the Bill", rather than on the Amendment. I noticed that several hon. Members


opposite rose to speak to the Amendment, and it occurred to me that if all Members on the Government side made their speeches now, while the Opposition Members made theirs on the Question "That the Clause stand part of the Bill", it would not provide the best form of debate and the best use of our time. I therefore thought that I would give notice that we propose to have a brief debate on the Question "That the Clause stand part of the Bill".

Viscount Hinchingbrooke: Since the Chancellor of the Exchequer enlarged upon the topic, and my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth) went fairly wide in introducing his Amendment, I should like to deal with the matter comprehensively now, if it is permissible. In my opinion, Estate Duty is about the most iniquitious form of taxation that our society has inflicted upon it. It should be swept away by a Conservative Government with a majority as large as that which we now have. It is a completely indefensible tax, as I said in the Budget debate, because it was devised for a previous era, when we had massive unemployment, very low wages and great impoverishment—

The Temporary Chairman (Sir Norman Hulbert): It would be more convenient if the noble Lord made that speech on the Question "That the Clause stand part of the Bill", unless he wishes to relate it specifically to the Amendment before the Committee.

Mr. Hirst: I should like to raise one point now, because I am not sure whether it would be convenient to do so in the debate on the Question, "That the Clause stand part of the Bill". It directly concerns the speech of my right hon. Friend. It is one thing for him to say that he does not want to dismantle the Revenue defences, but it is quite another to stand in favour of Estate Duty in principle, in respect of gifts inter vivos, to which the Amendment brings some abatement. It may be that he feels that this is all he can do this year, but I hope that it is not down in the record that he considers it represents fairness and justice, and that it is all that can ever be done in that regard. He should enlighten the Committee on that point.

Mr. Denzil Freeth: In view of my right hon. Friend not being able to accept my

proposal—which still seems to be the most sensible and logical way of proceeding; in view of the fact that he has said that cost was not the main argument against it—which I should have thought would be a very powerful argument if one was going to go only halfway in any kind of tax remission; in view of the fact that, having brought in this principle, we may hope that in the future the Chancellor or his successor will be able to go further along the road down which we seek to entice him, and go the whole hog instead of this rather emasculated version of it, and in view of the fact that my right hon. Friend has at any rate been generous enough to accept the principle that we are putting forward, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir Henry d'Avigdor-Goldsmid: I beg to move, in page 47, line 36, to leave out "and".
I think that it would be convenient if, together with this Amendment, I moved the Amendment in page 47, line 39, at end insert:
and
(v) any such dealing with a policy of life assurance as is referred to in subsection (3) of the last-mentioned section".

The Temporary Chairman: The hon. Baronet can move only one Amendment, but both can be discussed.

Sir H. d'Avigdor-Goldsmid: Then I suggest that our discussion should be concentrated on the second of the two Amendments, since the first would not be productive of much discussion. It is a very limited Amendment, dealing with what has hitherto been one of the most obscure branches of English taxation law, namely, the position of life insurance policies for Estate Duty purposes. If that law has been cleared up it is thanks to Section 34 of the Finance Act, 1959, to which the second Amendment refers.
The Clause gives a graduated relief to various forms of property passing on death, namely, gifts inter vivos, releases of life interest, purchases and various other matters. The object of the Amendment is to add a further property that passes on death, namely, life insurance policies. The effect of Section 34 of the Finance Act, 1959, is to make the law


with regard to life insurance policies conform to that prevailing in respect of other property, and subsection (3) specifically provides that in the case of a life insurance policy which passes on death, being a policy in respect of which both the original donor, who is now dead, and the donee have paid premiums, the amount caught for Estate Duty is the proportion of the value of the policy at the death of the donor as the total of the premiums he has paid bears to the value of all the premiums paid.
That sounds a very obscure concept, but it is impossible to phrase complicated matters in an entirely simple fashion. Professor Einstein, who had a very fine brain, said that he could understand everything except the popular explanations of his own Theory of Relativity. I therefore ask the Committee to bear with me while I try to explain this complicated matter.
The insurance policy in question is one on the life of the donor on which he has paid premiums and which he has subsequently transferred to somebody else who is known as the donee, and the donee has then paid the premiums. It is now provided under Section 34 (3) of the Finance Act, 1959, that in the event of such a policy being caught for Estate Duty the amount of the policy so caught is that slice of the policy which corresponds to the amount of the premiums that the original donor paid compared with the total value of the policy. There is, therefore, a substantial element of the policy caught for Estate Duty.
Suppose, for the sake of argument, that the donor transfers to his heir a policy on which he has paid 20 premiums, his heir subsequently pays four premiums on it, and the donor then dies. The amount of the policy which is caught for tax is 20/24ths of the total, namely, the proportion of the premium paid by the original donor compared with the total amount of the premiums paid. That is what Section 34 (3) of the Finance Act, 1959, provides.
The object of the Amendment is to bring this slice of the insurance policy which is caught for duty within the ambit of the reliefs proposed by my right hon. Friend for, amongst other things, gifts inter vivos. The concept is

fairly simple. Here is an insurance policy, some portion of which is caught for tax, yet it does not benefit in any way from the reliefs afforded under subsection (1), whereas landed property and stocks and shares which pass at the same time benefit from the special reliefs provided by this subsection. It would seem to be justice that the insurance policy, or that portion of it which is caught for tax, should enjoy the same reliefs as the other real property in the estate.

The Financial Secretary to the Treasury (Sir Edward Boyle): As my hon. Friend said, this is a complicated matter, but I will endeavour to deal with it as shortly as I can.
The point is that Clause 59 gives a graduated relief from Estate Duty on property which is deemed to pass by virtue of a gift or any other
relevant disposition or event.
Subsection (2) defines the relevant disposition for the purpose of this Clause by reference to the statutory provision in each case imposing an Estate Duty charge on the property in question. As my hon. Friend pointed out, one such provision is Section 34 (2) of the Finance Act, 1959, which is specifically mentioned in subsection (2, a) (iv) of this Clause.
Under Section 34 (2) of last year's Finance Act, the premiums paid by the deceased under a policy of life assurance which are kept up for the benefit of another person are treated as a gift of the proportion of the policy. My hon. Friend's Amendment proposes to add a reference to Section 34 (3) of the 1959 Act which relates to "dealing with" policies, for example, assignments of policies. The answer is that Section 34 (3) does not impose any Estate Duty charge on the transactions in question. It is concerned only with their valuation; they were already liable to duty under Section 2 (1, c) of the Finance Act, 1894, the famous Harcourt Act, which was the foundation of our modern Estate Duty legislation. They therefore qualify for relief under the opening words of subsection (2, a), and for that reason their specific mention, as suggested by the Amendment, is unnecessary. I hope that with that assurance I may be able to persuade my hon. Friend to withdraw the Amendment.

7.45 p.m.

Sir H. d'Avigdor-Goldsmid: If I understand my hon. Friend correctly, my Amendment, which is a complicated one, is unnecessary. I am therefore naturally very pleased to withdraw it. Therefore, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Powell: I beg to move, in page 49, line 4, at the end to add:
(6) Where in connection with a relevant disposition or event the trustees of a settlement have obtained from the Commissioners of Inland Revenue a certificate under subsection (3) of section forty-four of the Finance Act, 1950, or under that subsection as extended by subsection (7) of section twenty-eight of the Finance Act, 1958, the amount of such certificate shall be deemed to be reduced—

(a) at the end of the second year of the five-year period by fifteen per cent, thereof,
(b) at the end of the third year of the five-year period by a further fifteen per cent. thereof, and
(c) at the end of the fourth year of the five-year period by a further thirty per cent. thereof:
Provided that in a case where subsection (3) of this section applies, this subsection shall have effect with the substitution for each reference to the five-year period of a reference to the period of five years beginning with the time mentioned in paragraph (b) of that subsection.
In the event of a settlement being terminated the case arises which is covered by subsection (2) and there is a relevant disposition or event. Consequently, for the five years following there is the penumbra of and the potential liability to Estate Duty on the value of the settled property. The relevant legislation places the liability for meeting that eventual Estate Duty on the trustees of the settlement, who accordingly either retain sufficient of the settled estate to meet it, if it has to be met, or else insure themselves against the liability by paying premiums.
In that case they can obtain from the Estate Duty Office a certificate of an amount which is then treated as the maximum for which they can be liable, and that certificate determines the amount which they either withhold from the estate, or which they insure. I am sure it will be agreed that if we are progressively reducing liability of the estate as the five years elapse it is right that the amount which the trustees

retain in such a case, or insure themselves for, should also be progressively and pro rata reduced. The object of the Amendment is to effect such a reduction.
It would mean that as time went on those who were entitled to the distribution of the assets would be able to obtain them as the eventual liability in the event of a death during the five years declined. It may be argued that the trustees would know that as time went on their actual liability was falling. Nevertheless, they are under a statutory obligation which is limited only by the amount in the certificate, and if they are prudent they will tend, unless we alter the law, to withhold the full amount or to insure against the full liability. I therefore ask my hon. Friend to recognise this difficulty and to provide for the amount in the certificate to be deemed to fall as the eventual liability falls.

Sir E. Boyle: I think that it will be accepted by the Committee, whether hon. Members are in favour of the Clause or against it, that my hon. Friend is on an extremely good point, and I hope that I shall be able to meet the very fair point that he has raised.
Section 43 of the Finance Act, 1940, imposes Estate Duty on the death of a life tenant whose interest has been disposed of within five years of his death. To assist the trustees in knowing what their maximum liability shall be, and thus enable them to distribute the rest of the property, Section 44 (3) of the Finance Act, 1950, provides that they can obtain from the Commissioners of Inland Revenue a certificate of the probable amount due, and in that case their liability is definitely limited to that amount.
Under the provisions of the Clause, the duty chargeable will qualify for graduated relief according to the length of time that the life tenant lives after disposing of his interest. The trustees' liability will thus be reduced in the third, fourth and fifth years after that event and they will be then at liberty to distribute further property. The Amendment proposes, therefore, that the liability as stated in the certificate shall accordingly be reduced automatically after two, three and four years.
This is an entirely reasonable proposal in itself, and I can assure my hon. Friend


that it is intended as a matter of Departmental practice in the Inland Revenue Department that where trustees ask for a revised certificate after the appropriate period they shall be given one, subject to due inquiries.
There are reasons why I think that it would be better to deal with this matter as Departmental practice rather than by the Amendment. One point which may be familiar to some hon. Members is that under present law trustees ask for a certificate at the time of the disposition. At the end of five years they can apply for an assurance that no duty is henceforward payable; but before it can be given the trustees have to make a declaration that, first, the life tenant has been excluded from any benefits throughout the last five years and, secondly, that no operations are in view by which he may secure such a benefit.
If an Amendment in this form were adopted, the property retained by the trustees would be automatically reduced over the five years without any assurance that the life tenant might not in the meantime obtain some benefit which would keep the full liability alive. In that case the Revenue would lose an important safeguard.
There is another point which applies to the person himself. The Amendment simply applies the percentage of the reduction to the amount of duty stated in the certificate. In some cases the effect of the Clause may be to give a larger reduction than this; the abatement of the value of the property may in some cases affect the rate of duty for the whole aggregate estate, and therefore bring it into a lower band.
From whichever point of view we look at it, whereas I agree that my hon. Friend is on a very good point, I think it will be accepted that it would be better to deal with this matter by the issue of revised certificates on application and as a matter of Departmental practice rather than by accepting the Amendment.

Mr. Powell: I appreciate my hon. Friend's willingness to meet this point, and I certainly see the force of the first of the two practical difficulties which he urged, namely, that of the clearance certificate at the end of the period of elapse. On the other hand, it seems to me that if we are to deal with this

administratively, we place upon the trustees the rather futile operation of going to the Estate Duty Office three times, I think, during the period of five years in order to get a renewed certificate.
I wonder whether in withdrawing the Amendment—and I shall ask the Committee's leave to do so—I may ask my hon. Friend to consider whether the difficulties which he has urged cannot be met without the cumbrous machinery of a repeated application by the trustees to the Estate Duty Office for certification for something which he admits is happening automatically.

Sir E. Boyle: I will most certainly see how the Clause works out and I will undertake to my hon. Friend to keep an eye on its working. I will see whether there is any way whereby trustees will not be faced with the responsibility and difficulty of making too many unnecessary inquiries.

Mr. Hirst: I appreciate that my hon. Friend the Financial Secretary is trying to be helpful in this matter. I am a trustee and I have experienced this difficulty in getting a certificate. There is a very big time lag and tremendous delay, and it is tiresome for trustees if they have to go through this procedure. Surely my hon. Friend can find some way between now and Report to cover the very legitimate point made by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). If it is right and proper, under certain circumstances, as it is, for this responsibility to be mitigated—and quite clearly the intention is that it should be so mitigated—then the mitigation should be provided here too. I feel that this is a matter of principle. I am not happy about the present situation. We do not want to be awkward about this, but I am not happy to leave it in this airy-fairy way in which my hon. Friend has left it, if I may use that phrase.

Sir E. Boyle: I do not wish to leave it in any airy-fairy way. Frankly, I believe that it would be best to try to deal with this matter by Departmental practice rather than by an Amendment. My hon. Friend the Member for Shipley (Mr. Hirst) and I have known each other for many years. If he will forgive me for saying so, sometimes when I hear him talk about the Executive and


bureaucracy I am reminded of Arthur Balfour's phrase:
This is a singularly ill-contrived world but not quite as ill-contrived as all that.
I believe that the Clause will work satisfactorily. Nevertheless, I will certainly watch its administration, and we will do what we can to mitigate inconvenience to trustees.

Mr. Hirst: Will my hon. Friend do this? I undertake to go through this procedure forthwith and to make the necessary application if I may send him the results of my researches.

Sir E. Boyle: I shall be glad to receive any letters which my hon. Friend likes to send me.

Mr. Powell: We shall be in this difficulty, that if my hon. Friend the Financial Secretary carries out, as I know he will, the undertaking to watch the administrative working of the Clause, we shall be under the necessity, should it prove inconvenient, to come back to Parliament and perhaps have a special Clause in a future Finance Bill for this purpose. As long as this Bill is before the House we are seized with this matter and can deal with it legislatively. In asking the leave of the Committee to withdraw the Amendment, which I shall do in a moment, I urge my hon. Friend to consider before Report whether all these difficulties cannot be met quite simply inside the Bill by some adjustment.
Having said that, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Clause stand part of the Bill.

The Temporary Chairman (Sir Norman Hulbert): It might be for the convenience of the Committee if I reminded hon. Members that this Clause does not impose Estate Duty. It grades it, and therefore any discussion of Estate Duty in general would be out of order on this Question. I say that because I may have inadvertently misled the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) when I suggested that he should make his speech on this Question. I apologise.

Viscount Hinchingbrooke: I think that the best thing I can do, Sir Norman, is to proceed with my speech, and if

you find it out of order, you will no doubt pull me up. I attempted to say a moment ago that I thought that death duties, whether graduated or ungraduated, are about the most iniquitous form of taxation which any society can have inflicted upon it. It seems to me to be absolutely out of alignment with our modern society. It was—

The Temporary Chairman: Order. What the hon. Member is saying may or may not be so, but we cannot discuss it in Committee on this Question.

Mr. Hirst: On a point of order. Several hon. Members, including myself, out of respect to the Chair, either ceased speaking or did not speak at all on this matter on the Amendment, when leave was given by yourself for the matter to be discussed later. It is a little difficult if we cannot now have a fairly reasonable rendering of the rules of Order. I do not want to make a point about this, except that we respected the Chair too highly to quarrel with the Ruling at the time. I do not pit myself against the Chair in matters of order, and I would not dream of doing so, but I think that we should have a little leniency now, even if you cannot allow much.

8.0 p.m.

The Temporary Chairman: If the hon. Member had sought to make the type of speech he is now indicating during the discussion on the Amendment, he would have been out of order even more than he would be if he sought to make it on the Motion "That the Clause stand part of the Bill."

Mr. Hirst: Further to that point of order—

The Temporary Chairman: Order. If the hon. Member refers to Part V of the Bill relating to Estate Duty, he will see clearly that the description there in the margin of the Bill indicates that this Clause does not impose Estate Duty. Hon. Members will be well aware that the Committee can discuss on the Motion "That the Clause stand part of the Bill" only what is in the Clause.

Sir Kenneth Pickthorn: Surely, Sir Norman, what is in the margin has no effect whatever on the problem. It has no validity of presence whatever. I should not dare to accuse the Chair of being wide, but certainly


the rest of the Committee have been rather of one mind—no doubt it was unintentional—that it was made plain to us that there could be some debate on the main Question, and that it would be more convenient for the Chair and for the Committee if that occurred on the Motion "That the Clause stand part of the Bill". I have no ambition to participate, but there are those hon. Members who think it their duty to do so, and I respectfully suggest that hon. Members who have sat here all day have been more unfortunate than such "mugs" generally are.

Mr. Roy Jenkins: Surely this Clause is designed to reduce the incidence of Estate Duty in certain cases. Surely it is impossible to discuss in what way a tax should be reduced unless we can state our attitude whether or not the tax is desirable. I should have hoped that within reasonable limits we might be able to conduct the debate reasonably widely.

The Temporary Chairman: Of course, the Committee can discuss the mitigation of the tax. We cannot discuss the general imposition of Estate Duty.

Mr. Hirst: When the question came up and my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) mentioned something, you, Sir Norman, said that it was a point of principle which could not be discussed on the Amendment before the Committee, but that a point of principle could be discussed only on the Motion "That the Clause stand part of the Bill." The hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) has indicated that this, of course, is a principle which is involved, and we cannot discuss an Amendment without dealing with the principle. I must ask you, Sir Norman, to try to see our point of view, because the frame of the circumstances has been set by you. I was not in the slightest intending to make the kind of speech you suggested that I might be going to make—you have not even heard what speech I was going to make. I was not going to discuss the question of principle, because the question did not arise.

Mr. Gordon Walker: If we are to argue about whether a tax should be mitigated, surely we can argue

that it should be mitigated still further, and one has to say something about the nature of the tax in order to argue that.

The Temporary Chairman: The right hon. Gentleman cannot discuss whether a tax should be mitigated still further, because that point is not in the Clause.

Mr. Gordon Walker: Surely we can argue that it has not been mitigated enough. The degree of mitigation is in the Clause and one can argue whether it is correct.

The Temporary Chairman: As I hope I made clear, the right hon. Gentleman can discuss the degree of mitigation, whether to make it more or less, but on this Question the Committee cannot discuss the whole question of the tax.

Viscount Hinchingbrooke: I will try to relate what I have to say to graduation, mitigation and matters of that kind.
One graduation was introduced by Lord Dalton, as he now is, in, I think, 1946, when he increased the period of years over which death duty applies from three to five. I wish to know from the Chancellor, now that we have a large majority on this side of the Committee, why the five-year period has not been reduced to three. Why cannot we have a graduation of years downwards as well as amounts or percentages? I hope that my hon. Friend, who I am sure shares my feelings in this matter, will tell me why it is that the Treasury is still dominated by the radical liberalism of 66 years ago and is still putting forward every year to successive Tory Chancellors sterile schemes for the imposition of death duties, and whether we are to get graduation, mitigation and reductions to the point where we get rid of the tax. That is the first question.
In his supreme cynicism, Lord Dalton also at the time introduced another graduation. He provided that the first £5,000 of capital, I think it was, should be exempt from tax. In other words, he said that for a graduated class of our society this was an iniquitous tax and should not apply at all. He accepted on behalf of the Socialist Party, and put through on their behalf, the political doctrine that, so far as a wide ranging category of our society was


concerned, this tax should not be imposed. In other words, it was not a noble and fine and splendid political thing to do to have this tax on that section of society. But, because of his class prejudices, he allowed the graduation to rise up in a very swift geometrical scale until it involved the higher ranks of persons—

Mr. Douglas Jay: May I ask the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) whether he is arguing that the exemption limit should be put back from £5,000 to £1,000?

Viscount Hinchingbrooke: No, I am arguing for the reverse, for an indication on the part of a Conservative Chancellor of the Exchequer that this £5,000 exemption should be stepped up; that there should be mitigations against the operation of the tax in favour of an increasing element of our society—

Mr. Jay: Mr. Jay rose—

Viscount Hinchingbrooke: Just one moment—that £5,000 should be put up to £10,000 or £25,000 this year, with a view to putting it up to £50,000 or £100,000 next year, and by that means, by a process of graduation and mitigation of the tax undertaken during the lifetime of this Conservative Government, we should arrive at a situation where death duty no longer applies—but that is a point I do not seek to make, in view of the Ruling which has been given, because to do so would be out of order.
There is another differentiation and mitigation which we really ought to discuss. That is the difference between this tax as applied to a single person and a small group of persons governing estates or businesses and the wider-ranging categories in our commercial life, the great public companies and the private companies, provided that they are not controlled by more than a certain number of persons and other firms; the collective money-making activities in this country—the estate managing activities in this country—which are exempt altogether from death duties.
I want to know whether a Conservative Chancellor is capable of telling me the moral of all this. Why do we have to impose death duties, in particular periods as the generations fall, on individuals,

whether they manage very large properties or no properties at all, whereas whenever individuals collectivise into great businesses they are exempt from tax altogether? The property duty is exactly the same regarding estate property. The people employed there and the people who derive their livelihood are the same. The process of maintaining wealth is the same whether landed, business or whatever it may be—

The Temporary Chairman: Order. The noble Lord is straying once again.

Viscount Hinchingbrooke: I am trying to put in a plea for the same application of the business method of mitigation of death duty to the single person or family, as the case may be, who may own or manage a large concern in toto, as to a public big company.
I was shocked to hear the Chancellor just now, in referring to the Amendment, which is very relevant to this Clause and can be discussed on this Question, say that he thought the arguments on one side of the Committee and the other were nicely balanced and moderately put, but obviously, hon. Members opposite would not like it and, in view of that, the Chancellor would take a midway position and just carry on with what he has now got in the Clause. If the Chancellor's view of society is simply that on the Committee stage of the Finance Bill there should be an equalising of treatment between one side of the Committee and the other, that is not what the electors sent him back to this House to do after the last General Election, or what the great, massive ranks of Conservative supporters behind him intended him to do. What we intended my right hon. Friend to do—and any future Chancellor—on this matter of mitigation of tax and graduation of tax, and on the whole subject of death duties, is what Lord Dalton and the large majority in the party opposite did in 1946—stifle opposition in the Lobbies, and get proper Conservative reform.

Mr. H. Wilson: Would the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) make clear—it is a fascinating argument, and we are as tired as he is of the Chancellor taking the middle line—

Mr. Gerald Nabarro: Are you?

Mr. Wilson: Yes, indeed. We are as tired as the hon. Members behind the Chancellor. Is the noble Lord telling us that the Chancellor fought the election and that the noble Lord fought the election—

The Temporary Chairman: Order. The right hon. Gentleman cannot discuss this matter on the Question before the Committee.

Mr. Wilson: On a point of order, Sir Norman. The noble Lord suggested that the Government should take certain action—stifling us in the Lobbies, and things of that kind. On the particular argument which was adduced and which you did not stop him using, he said that they fought the election on the principle of the progressive elimination of death duties. Surely I am entitled to ask whether he or the Chancellor or any other hon. Member opposite put that to the electors at the time?

Mr. Anthony Crosland: We have listened to an extremely moving appeal by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) on behalf of the massive ranks of those who pay large amounts of death duty. There are today about 10,000 people in the whole country who would make up these massive ranks and vote for his policy. I do not propose to follow the general argument of the noble Lord on Estate Duty. If he really believes that, then his attitude is wholly inappropriate to the circumstances of 1960.
I wish to refer to the effect of this Clause and what it can do. In introducing it, the Chancellor said the object was to make Estate Duty more equitable. He pointed out—this has been pointed out more than once—that it is inequitable that one day should make all the difference between paying perhaps 80 per cent. of the estate in duty and paying nothing. It seems to me that this must be conceded. It is inequitable that one day should make all the difference.
Having said that, there are two possible methods of dealing with the inequity. One is the method which the Chancellor has adopted in this Clause, namely, introducing an element of graduation. But there is an alternative method of eliminating this inequity, which is not the introduction of an

element of graduation but, on the contrary, to bring all gifts, whenever made, under Estate Duty. It seems to me that it is our job to decide which of these two methods, the Chancellor's method of graduation or our method, which is to introduce a "gifts tax", is right to deal with the inequity which we all concede exists.
It is clear, and conceded by everyone, I think, that gifts inter vivos are very widely used as a method of deliberately avoiding Estate Duty. In a particularly childish speech during the Budget debate, the President of the Board of Trade said that he had never heard that gifts inter vivos were used for avoiding death duty, and he told a funny story about if he gave pocket money to his son, and so on. But it is common knowledge to everyone that gifts inter vivos are widely used as a deliberate method of avoiding the payment of Estate Duty.
8.15 p.m.
It is not merely a matter of common knowledge, one can produce conclusive evidence that this is so. The conclusive evidence is that the yield from Estate Duty during the last decade has not risen commensurately, or anything like commensurately, with the rise in capital values which, after all, are the basis on which the duty is assessed. In fact, the yield of death duties should, in logic, not merely rise proportionately with the rise in capital values. It should rise much more than proportionately, because it is a tax of which the marginal rates are higher than the average rates. The yield from death duties, however, is not rising even proportionately. Let us compare two things—the yield from death duties as given in Table 100 of the most recent Report of the Commissioners of Inland Revenue, on the one hand, with the market valuation of securities quoted on the Stock Exchange, on the other hand.
From 1949 to 1956 the yield of Estate Duty rose by precisely zero. During that time the market valuation of quoted securities rose by 27 per cent. In the whole period from 1949 to 1959 the yield of Estate Duty rose by 12 per cent. The market value of quoted securities rose by 47 per cent. That is an absolutely absurd discrepancy. Quoted securities, on the average, make up about 50 per cent. of the assets which are assessed for


death duty purposes. If one takes assets other than quoted securities, which are mainly land or property, it cannot be argued that they have risen in value less than quoted securities. Therefore, there is an absurd discrepancy here.
I will make one other comparison between the yield from death duty, on the one hand, and the amount of investment income which is assessable for Surtax, on the other hand.

The Temporary Chairman: Order. The hon. Gentleman is getting rather far away from the Clause.

Mr. Crosland: With great respect, Sir Norman, I do not think I am getting very far away from the Clause, because what we are discussing is whether to extend the concession under the system of gifts inter vivos. I am arguing very strongly against so extending the concession, on the ground that gifts inter vivos have led to a degree of avoidance which has made Estate Duty something of a farce. Therefore, this point is essential to my argument.
The yield from Estate Duty between 1949 and 1957 rose by 3 per cent., as compared with a rise in the amount of investment income assessable for Surtax of 50 per cent. This, again, is an absurd discrepancy, remembering that the yield from Estate Duty should rise not merely proportionately with what is happening to the value of privately-owned capital. It should rise more than proportionately, because the marginal rate of tax is higher than the average rate of tax.
It is clear, on the basis of the figures of the yield of death duty, that we have now reached the position when the tax is a farce. This has been said before. It is purely a voluntary tax, only paid by people who, by some quirk of psychology or because they have not got round to using accountants, or whatever it may be, choose to pay it.
What is the solution to this position? In my view—it is probably the view of most hon. Members on this side—the only solution to this position is the opposite to the solution of the Chancellor of the Exchequer. It is not to extend the concession of gifts inter vivos, but, on the contrary, to bring in a tax on gifts and to assimilate gifts completely under an inheritance tax. This would not be a new principle. A gifts tax

exists in the United States, Sweden, and in many other countries.
My view is that, if we introduced such a tax, we should combine it with a reform of inheritance taxes so that they became legacy duties and not Estate Duties. That is obviously a point for discussion. This is the logical solution to the difficulty which we are discussing, namely, the inequity of a single day making the whole difference. Instead of adopting this direction of change, the Chancellor of the Exchequer is doing the opposite and still further extending the possibility of avoidance by using the method of gifts inter vivos.
It is curious that on this, at least, the whole of the party opposite is united, the whole way from the Chancellor of the Exchequer to the noble Lord the Member for Dorset, South, in wishing in varying degrees to weaken the effect of Estate Duty, because that is what the Clause does. Any weakening of the effect of Estate Duty is, in practice, inconsistent with those ideals which, at any rate on platforms at election time, are constantly put forward by the party opposite.

Mr. Nabarro: Not by me.

Mr. Crosland: I will mention two ideals which are quite inconsistent with the desire to weaken the effect of Estate Duties. One is the ideal of a property-owning democracy.

Mr. Nabarro: No.

The Temporary Chairman: If the hon. Gentleman reads the Clause, he will appreciate that it has nothing to do with a property-owning democracy. I must ask him to keep his remarks within the Clause.

Mr. Crosland: Sir Norman, I shall certainly try to keep my remarks within the Clause and say this only. The effect of a Clause such as this which weakens the impact of death duties is not to diffuse property, as should happen if we are to have a property-owning democracy, but, on the contrary, to encourage the concentration of property, and this is what I thought was inconsistent. Again, I do not know how hon. Members opposite think that the kind of concentration of inherited capital which is encouraged by a weakening of death duties is consistent with the Opportunity State, with everyone starting equal, with equal chances of going up the ladder.
It is absolutely clear that the Clause is a further step in weakening the general impact of death duties. It will encourage a greater concentration of capital. It will discourage the diffusion of property. It will discourage the equilisation of opportunities for all citizens in the country. It is, therefore, a Clause strongly to be resisted.

Mr. Stevens: One aspect of the speech of the hon. Member for Grimsby (Mr. Crosland) interested and, indeed, surprised me. I seem to remember during the General Election campaign not so long ago a claim being made that certain national expenditure would be met without any increase in taxation. Yet the hon. Member for Grimsby has very definitely suggested increased taxation. Am I wrong?

Mr. Crosland: Yes. We are not discussing in this Clause whether taxation should be increased or decreased. That is not what the Clause deals with. What we are discussing is whether a particular loophole, as we think, should be opened up in Estate Duty.

Mr. Stevens: I find it hard to believe that the elimination of the five-year period at present existing and the imposition of a gifts tax will not increase taxation. If the hon. Gentleman thinks that it is not increased taxation, it is no wonder that he has been on the losing side for so long.

Mr. H. Wilson: What we said related to the rate of Income Tax, but I should be out of order if I developed that. I can tell the hon. Member, because I probably spoke as much on this subject as anyone, that we said categorically that we would tighten up death duties, make them effective and get rid of the avoidance which has been going on all this time.

Mr. Stevens: The conversion of gifts inter vivos into a tax upon gifts is not my idea of tightening up. It is the imposition of a brand new tax. We did not hear much about it last October.
I felt a great deal of sympathy with what my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) said on two counts—first, the difficulty of keeping within order on this Clause and. secondly, the feeling that, though

one is grateful to my right hon. Friend the Chancellor of the Exchequer for what he has done—better half a loaf than no bread, as my noble Friend will agree—none the less it has not gone far enough. One had felt that on this occasion more could have been done, because I cannot imagine any less inflationary reduction of tax than a reduction of death duties in one form or another, and this, indeed, is one form of reduction. I am sorry that my right hon. Friend is not able to go further. I sympathise, too, with the Amendment moved by my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth), the effect of which would have been to increase this improvement in our system of death duties.
I do not want to detain the Committee on matters of principle. I want to raise one point which is important and which may have been overlooked. Settlements come under the general category of gifts inter vivos and are subject to the concessionary treatment of this Clause, namely, the reduction of 15 per cent., 40 per cent. and 60 per cent. in the third, fourth and fifth years. But a number of settlements at present existing and settlements to be created in future provide that the income from trust funds shall be accumulated for five years or the life of the settlor, whichever is the less. I am not clear that the Clause as at present drafted extends the 15 per cent., 40 per cent. and 60 per cent. concessions to the accumulated income of such voluntary settlements. I shall be glad to hear what my hon. Friend the Financial Secretary has to say about that. I think that accumulated income does not reap the benefit of the Clause. If that is so, some Amendment should be introduced between now and Report.

Mr. Douglas Johnston: In an earlier intervention the Chancellor of the Exchequer said that it was no part of his policy to dismantle the Revenue's defences against avoidance of Estate Duty. The task of dismantling the Revenue's defences in the case of larger estates has already been done by the legal profession, to which I belong. There is no doubt that no one, except an eccentric or a person who is badly advised, need now pay any Estate Duty. All that this provision does is to put the procrastinator, the person who delays in making the necessary arrangements, in


a rather better position that he would be if the Clause were not carried.
The effect of the Clause is simply to allow the man who delays making the necessary arrangements to make them at a somewhat later date. There is no doubt whatever that those with larger estates—I have in mind estates of £100,000 upwards—can make such arrangements by inter vivos gifts, by gifts in consideration of marriage, and so on, and that which they give away will never attract death duty.
Not only will it not attract death duty in the present generation, but it will not attract death duty in the future because of the habit of conveyancers and settlors now of settling all gifts under discretionary trusts that are carried from one generation to another, with the result that in future we will never have any passing on death. This Clause will simply make that rather easier, although, when I say that, I should mention one exception.
It is rather easier to carry on this avoidance of tax in England than it is in Scotland. On that, I have been in correspondence with the Chancellor, but I shall not worry the House with the details as it is a rather difficult matter. I suggest that if we are not to avoid this dismantling of the Revenue defences against the avoidance of Estate Duty, the Chancellor should, first, not press this Clause and, secondly, he should have a thorough examination made by a committee of the standing of the Radcliffe Committee into the whole subject of Estate Duty.

8.30 p.m.

Mr. Hirst: The hon. Member for Grimsby (Mr. Crosland), in a rather amusing, knock-about turn, referred to the interest of hon. Members on this side of the Committee in the great number of Estate Duty payers. He referred to the whole 10,000 of them, but he should check his figures. I have in front of me the Inland Revenue Report for the year ended 31st March, 1959, which shows that, for the one year alone, 67,000 such estates were involved. That, of course, is not the sum total of interests in the matter, because all legatees have a profound interest in these estates, and that probably brings the figure to a quarter of a million or more—

Mr. Crosland: I was certainly not trying to mislead the Committee. I know that the total number in that year was 66,000-odd, but I think I am right in saying that the number assessed for Estate Duty is contained in a figure of 15,000—that is, the large estate leavers. The great bulk of the 66,000 left estates of from £5,000 to £10,000.

Mr. Hirst: I anticipated that reply. A table on the next page of this Report, shows the number to be 15,000, and the net value of the estates amounts to over £300 million, upon which Estate Duty—admittedly at a low level—was levied. A sum of £300 million in any one year besides attracting Estate Duty covers a vast number or people and interests. However, I do not want to labour the point particuarly; I only mention it as a fact.
I am profoundly disappointed that my right hon. Friend the Chancellor is not present for the discussion of this very important Clause. There may be some explanation of his absence, and I should be glad to have it, but I think it rather discourteous of him. He seems to imagine that just because he has made some graduation—as my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) said, better half a loaf than no bread at all—that all is right, but this is nothing like right. This is a rather small, dry dinner bun.
I repeat that I do not think it at all courteous of my right hon. Friend to be absent from the discussion of this extremely important Clause, whatever the circumstances may be. If there is a Cabinet meeting, he should have been excused attendance from it. I am not prepared to accept any excuse, except illness, for his absence. I do not mean any discourtesy to my hon. Friend the Financial Secretary, whom I respect very highly, but this is a very important Clause, and the fact that the Committee is discussing the Question, "That the Clause stand part of the Bill" has been on the indicators for a long time now. It is very discourteous of my right hon. Friend and we are all very sorry that he should have thought this matter to be of small account.
I accept at once as a matter of principle that the whole question of Estate Duty is a scandal. It is true that my


right hon. Friend has introduced graduations, but those graduations are only graduations of what is a scandal. There is no case or reason for this duty. It represents money taken in lump sums out of capital and spent as income—but I will not pursue that point any further. Bearing in mind that the Conservative Party has been in power for about nine years and that this is the only really serious endeavour—and I use that phrase out of courtesy—to lower or to mitigate the burden on inter vivos gifts, it is a shocking business and nothing to be proud of.
Obviously, I could not vote against the Clause. It is a mitigation and, as such, I accept it, but I must confess that I was shocked by the language used by the Chancellor in reply to one or two earlier remarks. He indicated quite clearly, in defending a whole range of this duty, that he felt that here he had done something fair, that that was the end of it, and that there was no likelihood of any further mitigation, even of this character, in a subsequent year. Such a thought as further mitigation did not seem to be in his mind at all. This is a shocking business. I am very sorry to hear reports that he is about to retire. He has done a lot of good work, but, if those reports are true, I can only say that in this case I shall regret the manner of his passing from political life.

Mr. Diamond: The speeches of hon Members opposite have allegedly been concerned with mitigation of Estate Duty on inter vivos gifts. Nevertheless, they have made it clear that they are not concerned with mitigation but are interested only in one thing—the reduction of Estate Duty. They want the reduction of Estate Duty.

Mr. Hirst: Quite right.

Mr. Diamond: That is perfectly fair. Hon. Members opposite look at the matter in that way. I must say that I have been astonished to sense the depth of feeling expressed about it. They obviously put it high on the list of priorities, without any suggestion of what revenue is to take its place in order to provide for the services which have been voted.
I am astonished at what hon. Members say, because I should have thought that

the one duty which would be most acceptable would be Estate Duty or a gift tax. It is a duty levied in these circumstances. A person receives something for which he has done no work, no "sweat", no preparation—a pure gift, a gift from the gods—and, when he is in that position, he is glad to say, "I do not mind if I have to pay 10 per cent. If I get 90 per cent. or 80 per cent. or even 70 per cent. of it, it is all something for nothing".
I should have thought that hon. Members opposite would have much preferred a real and effective Estate Duty rather than have their endeavours in their everyday lives taxed much too highly, as they say they are, and rather than have the productive effort on which the wealth of the country depends lessened on that account, as they regularly say that it is. To come here and complain about Estate Duty—that is all that has been said—and yet to give no indication of what is to take its place is to make no adequate contribution to the debate.
On the very narrow point of the apparent anomaly, it is, of course, anomalous that 365 days should make all the difference as compared with 364. But whose fault is that? It is the fault of those who try to produce a system under which certain gifts only bear duty. If, as my hon. Friend the Member for Grimsby (Mr. Crosland) said, we had a proper tax structure under which all gifts bore duty and, as a result, Estate Duty was much reduced and, possibly, other taxes were much reduced, as would inevitably be the case if one were gathering the same amount of revenue, then the anomaly would not arise at all.
To deal with it on an even narrower basis, if one argues that there is an anomaly here with regard to the five-year period and gifts inter vivos and one wants to spread the incidence of the high tax, why not extend it to six and seven years? Why not say: up to five years, 100 per cent. duty; six years, 50 per cent. duty; seven years 25 per cent. duty; and eight years, no duty at all? That is an alternative and equally logical way of dealing with the narrow difficulty which is alleged to exist. But, of course, that is totally unacceptable to hon. Members opposite because they are


concerned with one thing only, that they themselves and those they represent should not be called upon to put their hands in their pockets, even if it is the pocket of a dead man.

Sir H. d'Avigdor-Goldsmid: The hon. Member for Gloucester (Mr. Diamond) has made many interventions in the course of our debates, but I think that that was one of his less fruitful ones. In this case, he has not done the homework which he usually does. Since you, Sir William, considered his speech to be in order, it is not for me to suggest that it was not, but as this Clause deals with Estate Duty and the hon. Gentleman taunted us for not suggesting other revenue-raising schemes, it would, I opine, be difficult to remain in order if one tried to accept that invitation.
I wish to return to the Clause, and I shall not depart, I hope, from the narrow ambit of the Clause in the least. The Clause grants a mitigation of Estate Duty in respect of certain property passing on death. It gives mitigation in respect of gifts inter vivos, releases of life interests and purchases of reversions. There are other properties passing on death to which it does not give relief, and, with great respect, I suggest that it must be my right hon. Friend's intention that all property passing on death should receive these mitigations if the time factor allows.
I am particularly emboldened to say this in favour of a certain small matter to which I wish to draw attention, because there is involved in it a class of property which owes its statutory existence, as it were, to the Finance Act, 1940. It was first recognised in the Finance Act, 1940. The 1940 Act was subsequently amended in 1946 so that the period after which such gifts should cease to be liable for duty was increased from three years to five years; in other words, the three-year period, as we call it, was extended to five years. Now, when considering these mitigations, I have not seen anything in the Bill to suggest that these are included.
I regret very much boring the Committee with technical matters which I see no way of expressing except in technical terms. I shall try to avoid repeating myself and try to convey the gist of my argument.
The object of Section 46 of the Finance Act, 1940, was to place a person who enjoyed a substantial proportion of a company's income in the form of benefits on the same footing as regards Estate Duty as if he were the absolute owner of a corresponding proportion of the company's assets. Section 48 of the same Act provides that, even where the deceased has surrendered such benefits, his estate still gets caught for Estate Duty on the benefits he has surrendered if five years have not elapsed between the date of the surrender and his death. Where Section 46 applies, duty is payable on a slice of the assets of the company equivalent to the proportion which the total amount of the benefits derived by the deceased from the company during the five years preceding his death bears to the total income of the company during the same period.
I should explain that "benefits" is a very wide term, including not only benefits that the deceased actually got or was entitled to have from the company, but even benefits which he could have been entitled to have by an exercise of any power which he possessed when alive.
Under the Clause we are now discussing, we thought it right to mitigate the harshness of the five-year rule, with all the consequences it may bring to the taxpayer if he fails by a day or a few days to live for five years after making his deed of gift. We have agreed that this clemency shall apply to the various categories I have mentioned. I suggest that it is reasonable that similar treatment should be meted out to a surrender of benefits such as that to which Sections 46 to 68 of the Finance Act, 1940, refer.
This is a complicated matter to explain, but I believe that the case in equity is apparent and, if my hon. Friend will study the facts, I believe he will realise that this is a case which should be brought within the ambit of the Bill.

Major W. Hicks Beach: I certainly welcome this Clause because it is going to a limited extent towards accepting the new Clause which I put down in the Finance Bill last year. The purpose of that Clause was to reduce what we call the inter vivos period from five years to three years. It was a. simple point as I made clear. I put the, point to the Committee, I hope quite fairly, from a practical point of view.


Some hon. Members not concerned with practical matters are apt to talk from the economic point of view and not the practical point of view. It was my view then that from a practical point of view the proper period, if we are to have Estate Duty, which I personally do not approve Of—[HON. MEMBERS: "Oh".] I am on record on many occasions as having said that I did not approve of Estate Duty. It is a thoroughly unsound tax. I am surprised that the hon. Member for Gloucester (Mr. Diamond) believes in Estate Duty. What are we doing by having Estate Duty? We are accepting capital and using it as income. The qualifications of the hon. Member for Gloucester as an accountant are very high, but I am sure he will appreciate that it is a very unsound thing from a financial point of view.

Mr. Diamond: Mr. Diamond rose—

The Deputy-Chairman (Major Sir William Anstruther-Gray): I am afraid that the Committee is in danger of getting rather wide of the comparatively narrow point included in the Question.

Major Hicks Beach: I thoroughly accept your reprimand, Sir William, and I apologise for what I have said.
8.45 p.m.
I think that I would be in order in dealing with the observations of the hon. and learned Member for Paisley (Mr. D. Johnston), for whose legal knowledge I have the greatest possible respect, concerning discretionary trusts and Estate Duty. He is a Scottish lawyer and I am an English lawyer, but seriously to suggest that it is possible to create a discretionary trust which goes on for ever is unrealistic. [Interruption.] The hon. Member for Gloucester is not a lawyer. If he knew a little more about the law, he would realise that there is such a thing as the law of perpetuity. The Clause is a practical attempt to try to get the present legal position of gifts inter vivos on a fair basis.
I was interested to read some of the observations of the hon. and learned Member for Kettering (Mr. Mitchison) on this matter. He made an extremely sensible observation, as usual. In commenting on what I said on the new Clause which I proposed in the Finance Bill last year, which, in practice, has

been adopted by the Government, the hon. and learned Gentleman said:
Let me tell the hon. and gallant Gentleman of one rather personal sympathy. I have always understood that the present provisions of Estate Duty are thought to result in putting grandfathers into refrigerators when they reach an advanced age and a certain state of decrepitude."—[OFFICIAL REPORT, 15th June, 1959; Vol. 607, c. 79.]
If that is the view of hon. Members opposite as to how the law of Estate Duty should operate, it is high time that it was changed.
I would not be in order if I were to stray beyond this Clause. I think that it is a step forward in the right direction. It is an attempt to get the whole law of Estate Duty on a proper and fair basis. I hope that the Government will regard this as only one stepping stone towards a thorough reorganisation of the whole law of Estate Duty.

Sir E. Boyle: We have spent nearly an hour on the Question, "That the Clause stand part of the Bill," and it may be that the Committee feels that the time has now come to take a decision on it.
I think that we have had a very agreeable debate. [HON. MEMBERS: "Agreeable?"] Well, agreeable to listen to. The Committee can congratulate itself on having kept the Clause in sight for a fair proportion of the time. I am sure that hon. Members would like to express their indebtedness to you, Sir William, and to your colleagues for the indulgence which, at odd minutes, you have shown.
Before I come to the wider aspects of the Clause which have been discussed, I should like to reply to two of my hon. Friends who have raised particular points. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) raised a highly technical point. I have taken due note of it. I will not attempt to deal with it at length—I do not think the Committee would wish me to do so—but if it is thought that an Amendment should be tabled on Report to deal with the matter, we shall certainly consider tabling one. My hon. Friend was on a very fair point.
My hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) raised a point about settlements which include provisions for accumulating the income


for five years. His speech was not totally dissociated from an Amendment on the Notice Paper which did not catch your eye, Sir William, but none the less, I understand that the point with which my hon. Friend was concerned was that in the case of settlements made before Budget Day with provisions for accumulations for five years the charge under Section 1 of the 1894, Finance Act, should be waived and the settlement be liable only under section 2 (1, c) of that Act. The point is a fair one, but the proposal as I understand it tonight goes rather beyond the scope of the Clause, which is not designed to affect the basic liability to duty. I will certainly take note of the point, but it goes rather beyond the scope of the Clause as drafted.
My hon. Friend the Member for Shipley (Mr. Hirst) asked why my right hon. Friend the Chancellor of the Exchequer was not present. Whatever criticisms can be made of my right hon. Friend concerning the Bill, nobody can say that in comparison with any Chancellor he has not spent a reasonable amount of time listening to the debates. If he is not present now, it is because he has been present throughout the whole of the debate on Part III of the Bill and he has one or two important Amendments to which to reply from both sides of the Committee when we reach the last section of the Bill in, I hope, a fairly short time.
My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) thought that the proposal contained in the Clause was somewhat mealy-mouthed, and he complained that my right hon. Friend was adopting what he described as a midway position. I have a terrible confession to make to my noble Friend. I am myself the son of a Gladstonian Radical. Perhaps, however, one should look at the Clause in the context of the Budget and the Finance Bill as a whole. We are dealing this year with a Budget and a Finance Bill designed to exercise a moderate restraint on demand. It is against that background that one must consider how great was the concession that my right hon. Friend could afford this year in respect of Estate Duty. He is not giving much away in the Budget as a whole. He has been forced to take back slightly more in taxation than he is

conceding. Therefore, this was as big a concession as my right hon. Friend felt able to afford this year in this part of the field.
I do not believe that a proposal is a bad one because it can be assailed from two points of view. On the one hand, it is fairly widely felt throughout the country, not only among members of my own party, that if we have a five-year rule, it is inequitable and anomalous that one day should make all the difference between paying no duty at all and payment of duty at 100 per cent. On the other hand, I see no reason why the estate should not at least have a considerable premium in the person concerned living the full five years. A system of graduation by, say, geometrical progression after the first two years is a perfectly reasonable and sensible halfway proposal. I would say to my noble Friend that there is nothing totally wrong in having on this side of the Committee some belief in the idea of The Middle Way.

Viscount Hinchingbrooke: That is at least thirty years old and we are wondering whether it has any applicability at the present time.

Sir E. Boyle: It is much less than thirty years since I last read that work, and there is much of its doctrine which I still find acceptable. My noble Friend must bear with the fact that I have been always a rather violently moderate man in my own opinions.
Finally, I should like to say a word in reply to hon. Members opposite who have taken part in the debate. We do not believe that the Clause will wreck the position of the Inland Revenue. On the contrary, it is the virtue of my right hon. Friend's proposal that it will, at one and the same time, remove an anomaly to which many people have drawn attention and leave an adequate safeguard for the Inland Revenue.
I cannot accept the argument of the hon. Member for Grimsby (Mr. Crosland) that what we are doing in this Clause is in any way inconsistent with the idea of an opportunity State or the idea of wider diffusion of property. When we discuss any Clause of this kind, we come to a point where, on opposite sides of the Committee, we start from rather different judgments of value. I cannot, however,


feel that the Clause and this proposal are inconsistent with the positive objectives, which are widely felt, I believe, in the Committee as a whole, concerning the kind of Britain that we wish to see in the future. This is a modest proposal designed simply to moderate an inequity which has long been felt and to which attention has often been drawn. It is in that spirit that I commend this proposal to the Committee and ask the Committee to approve it.

Mr. Roy Jenkins: The debate, as the Financial Secretary told us, may have taken more than an hour, but nevertheless it has been very well worth while. It has been a debate in which, apart from the Financial Secretary himself, we have seen the modern Conservative Party at its best. We had the hon. and gallant Member for Cheltenham (Major Hicks Beach), with his broad human sympathies tinged, as he constantly reminded us, by deep but unspecified practical experience.

Major Hicks Beach: I have been working on this all my life.

Mr. Jenkins: With so little result as far as the Committee is concerned, if that is the case.
We had the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) with his forward-looking political and sociological thought, and all the time we had the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport), though not actually speaking—and we regretted that—but in the form of expressions either of approval or disapproval giving us the results of his mature consideration of these matters. I thought that the only hon. Member opposite who marred this picture of the modern Tory Party was the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) who, while being as usual extremely disdainful about the logic and lucidity of everyone else's speech, was to me just as incomprehensible as he always is.
I want for a moment to go back to the speech of the noble Lord the hon. Member for Dorset, South. In the early part of his remarks he returned to a theme which I have heard him develop on a great number of occasions. This was that any tax, but in particular this tax, was a tax designed by radical liberals of great iniquity to deal with the condi-

tions of a slum-unemployment society. This is a fine, ringing phrase the exact meaning of which no doubt, had the rules of order been looser, the noble Lord would have explained to us more fully. But this is a point which the noble Lord has made on many previous occasions in relation to all forms of taxation that we have ever debated in this Committee. I have never heard him explain it or tell the Committee what he thought was suitable to meet conditions when we have advanced from a slum society.
The noble Lord also advanced the extraordinary argument that because Lord Dalton, when he was Chancellor of the Exchequer, had put up the exemption limit for Estate Duty to £5,000, presumably thinking that it was a good thing for large numbers of people with small estates not to pay duty, it must follow that it would be a good thing for Estate Duty not to be charged on anybody. This seems to me an extraordinary principle, because I cannot see why it should have more application to Estate Duty than to Income Tax, and I do not know whether the noble Lord has been against raising the exemption limit or abolishing Income Tax as a whole. One or the other seems clearly to follow from the noble Lord's propositions, and I hope that he does not regard arguments as being merely radical-liberal iniquity.
To apply myself, in reply to the noble Lord, to a question which my hon. Friend the Member for Grimsby (Mr. Crosland) dealt with to some extent—why we on this side of the Committee are not in favour of excessive mitigation of Estate Duty—I have no desire to be vindictive to any taxpayer or owner of any large estate, but I must point out that there is a strong natural tendency in any advanced society, and I suspect in any form of society, for property, without measures to the contrary, to be concentrated in fewer and fewer hands. The natural order of things without taxation is for property to become steadily more concentrated and, indeed, we are in a position today—

Sir K. Pickthorn: It is not true. That has no relation to fact.

Mr. Jenkins: It certainly bears relation to any advanced modern industrial society, and I know of no example where the contrary is true.
9.0 p.m.
Let us consider the present position. This is not a subject about which we have very up-to-date statistics, but the latest statistics indicate that 1 per cent. of the population still owns not far short of one-half of the total private property in the country, probably slightly less than half now, and perhaps about 40 per cent. That is after sixty-six years of death duties. It is after a decade of death duties with a maximum rate of 80 per cent. and after two decades of death duties with a maximum rate of 60 per cent. Can hon. Members opposite imagine what the distribution of property would be if during that period there had been no death duties and nothing working against the natural tendencies? I find it very difficult to imagine it, but I am sure that it would have been a situation completely inconsistent with anything which could possibly be called a property-owning democracy.
As will have emerged from what I have said so far, the Clause does not command the support of the Opposition and we shall divide against it. The argument in its favour is that to some extent it reduces the lottery element in the operation of death duties, and in general and in principle the Opposition are not in favour of encouraging what might be called the lottery element in any aspect of our taxation system. Indeed, we would like to get rid of the element of pure chance in which one pays tax if one is unlucky and one does not pay it if one is lucky. We would like to get rid of that to a much greater extent than is done by the Clause but not, as is now proposed, at the expense of the Revenue and at the expense of having a system of death duties less effective than that now obtaining.

Viscount Hinchingbrooke: In that case, why did the Opposition not give us their views on the subject? It would have been perfectly possible to have drawn up a finely graduated Clause leaving the revenue at 85 or 90 percent. of what it now is.

Mr. Jenkins: I was about to give not merely the noble Lord but the whole Committee precisely my views on that point. If the noble Lord will pay attention for a little longer, he will find that I hope to explain exactly what our attitude is.
In principle, there is clearly no argument for saying that if a man dies four years and eleven months after making over his property to his heir, full death duties should be paid, while if he dies five years and one month after doing so, no duty should be paid.

Mr. Nabarro: Coming on.

Mr. Jenkins: If the Chancellor wished merely to deal with that problem without loss to the Revenue and did not wish to make a concession reducing the yield of death duties, which, as my hon. Friend the Member for Grimsby pointed out, is already strikingly low in relation to what has happened to capital appreciation, the way to have done it would have been to taper off on both sides of the five-year limit, so that he would have balanced a concession which costs the Revenue a good deal by making good the difference the other way.
There is no magic in the five-year period, which operates in an extremely undesirable way; but the way in which to have done it would have been to make a concession downwards below five years and upwards beyond five years. Substantial concessions in death duties are already made, about agricultural land, for instance, and another small concession is being made in Clause 60.
As my hon. Friend the Member for Grimsby has pointed out, the results of concessions have been in the extremely disappointing yield of Estate Duty. Death duties are now one of the most dishonest aspects of our taxation system. By "dishonest" I do not mean the word in this context as in the case of dividend stripping, bond washing, or the other things which we have been discussing. This is not something which encourages deliberate dishonesty by taxpayers. I mean that it is intellectually the most dishonest aspect of our tax system, because the Government pretend that we have extremely heavy rates of death duties, rising to 80 per cent. on estates of more than £1 million, while they countenance—more than countenance, encourage—a system in which fewer and fewer people pay those duties.
It is clearly the case that there is no reason why a man who trusts his children and who can look forward, and who lives a reasonable span of life, should pay any death duties worth speaking of,


however much his estate may be. I cannot understand how it can be argued by the noble Lord, who is muttering—I am not sure whether he is arguing—or by the Government that this is what one can call an honest taxation system in which there are very high rates which happen to fall on a small number of people, when they encourage—and this is what the concession does—an increasing number of people to avoid those taxes by making over their estates at the appropriate date. If the Government take the view that the present rates are too high, they would be far more honest if they brought forward a proposal to reduce them.

Mr. Nabarro: Next time.

Mr. Jenkins: I do not say that we would support them, but it would be clear-cut, honest and understandable, and preferable to having a Chancellor-assisted honeycombing of the tax base, which seems to be an entirely undesirable and indefensible system.
What should be done to have a sensible system of taxation through Estate Duty? I would think there was no doubt—as my hon. Friend the Member for Grimsby suggested—that if we taxed transfers of property, as hon. Members on this side strongly believe we should, the tax should apply to all large gifts inter vivos at whatever stage in a man's life they are made. That is the only sensible system. We could do it at rates which appeared reasonable, bearing in mind the fact that we have an effective system of taxation, and not a mockery.

Mr. Nabarro: The hon. Member suggests that we should tax gifts inter vivos at any stage in the life of a man or woman. What happens when a man wants to get married and gives his girl friend a ring worth £1,000? Will the hon. Member tax that? Will he try to tax me when I give my wife a silver wedding gift, or something of that kind? That is a gift inter vivos

The Deputy-Chairman: I hope that the hon. Member will not be tempted to go too far in reply to that question. The Clause deals with the graduation of charges and not with the principle, and it would be easy for the Committee

to be led away into discussing the principle, which would not be in order.

Mr. Jenkins: I do not propose to be tempted too far by the hon. Member for Kidderminster (Mr. Nabarro).

Mr. Nabarro: Just answer me.

Mr. Jenkins: I hope that the hon. Member will not get over-excited about my failure to answer him. There is no difference between the position which will exist in relation to a tax on gifts inter vivos applied throughout a man's life and that which exists now in respect of the last five years of anyone's life. Nobody has ever suggested that in the last five years of his life a man is prevented from giving Christmas presents or any other sort of present.

Mr. Nabarro: Mr. Nabarroindicated dissent.

Mr. Jenkins: When the hon. Member for Kidderminster gets an answer he must not pretend that he has asked an entirely different question simply because he does not like that answer. The position in respect of gifts would be exactly the same as it now is in the last five years of a man's life. If the hon. Member for Kidderminster would think for a moment, instead of shouting, he would realise that the rule in no way operates so as to prevent someone giving reasonable gifts, provided he is not clearly making a deliberate attempt to transfer property in order to escape duty.

Mr. Nabarro: Mr. Nabarro rose—

Hon. Members: Sit down.

Mr. Jenkins: The hon. Member for Kidderminster gets increasingly excited. It is no good his gazing down the Chamber like Lord Kitchener looking over the ramparts of Khartoum.

Mr. Nabarro: Mr. Nabarro rose—

Mr. Jenkins: If I am inhibited from giving way again it is because I am conscious that we are brushing the frontiers of order in this discussion, and I do not want to be led beyond them by the hon. Member for Kidderminster or anybody else. But I have no doubt that a general tax on gifts inter vivos, at a rate which appeared reasonable within an effective system, and with the tax levied, if possible, as a legacy duty


—in other words, on the individual who received it; the donee rather than the donor—and progressing according to how much legacy had been received, would be a far more effective approach to this problem than anything we have so far achieved.
I have indicated our general lines of approach, and it would be out of order to develop them. I repeat that we cannot support the Clause. We do not think that it ends the lottery which rather disfigures the operation of Estate Duty at

present. It merely alters the odds and rigs them to some extent against the Revenue. It does not provide either an honest or a logical system of taxing capital profits, and until we have that we shall not be able to support a proposal like this, which merely creates a new and very large loophole.

Question put, That the Clause stand part of the Bill.

The Committee divided: Ayes 215, Noes 148.

Orders of the Day — Clause 61.—(INCREASE OF RATE OF PROFITS TAX.)

Mr. Mitchison: I beg to move, in page 50, line 7, at the end to add:
Provided that this section shall not have effect in relation to any trade or business carried on by a local authority as defined in section twenty-one of the Finance (No. 2) Act, 1945.

The Deputy-Chairman: I think it would be convenient to discuss with this Amendment the following four Amendments, namely,
In line 7, at end add:
Provided that this section shall not have effect in relation to any trade or business carried on by any body corporate, unincorporated society or other body, which by the nature, form or terms of its constitution cannot lawfully make any relevant distribution.
In line 7, at end add:
Provided that, if at any time in any year the scale applicable to loans advanced to local authorities, as defined in section ten of the Local Authorities Loans Act, 1945, from the local loans fund includes any rate of interest in excess of three per cent. this section shall not have effect in relation to any trade or business carried on by such a local authority.
In line 7, at end add:
Provided that this section shall not have effect in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955


In line 7, at end add:
Provided that this section shall not have effect in relation to any sports association carried on as a non-profit making body.
The last two of those Amendments have been selected for a Division if required.

Mr. Mitchison: The first thing to get clear is that Profits Tax has changed its character considerably. It can no longer be regarded as a tax on profits. It is a tax, but, unlike Income Tax, there are few concessions to undertakings of any particular kind—there is nothing corresponding to investment allowances and the like—and one requires to see the effect it is having in one or two particular cases.
These Amendments relate first of all to trades or businesses carried on by local authorities. The first of the Amendments to be discussed with the Amendment I have moved is a rather broad Amendment which would include trades or businesses of that type and other trades or businesses carried on in most cases for public purposes by nonprofit-making bodies.
9.30 p.m.
When the Profits Tax first appeared in 1937 statutory undertakings were exempt. In effect, they were local authorities or others carrying on certain essential businesses, such as the supplying of water, gas, electricity, and transport undertakings. I will not go through the list at length, because the point is clear enough. In 1951 these same local authorities and other statutory undertakers were brought into the ambit of Profits Tax under a system which then prevailed. They were brought in on the footing that they made no relevant distribution and were taxed only on the lower rate.
Hon. Members will remember that in 1959 there was a change to a general rate of 10 per cent. and at that time, without going any earlier, the rate of Profits Tax was 30 per cent. and non-distribution relief was 27½ per cent.; so in fact, the taxation on the basis of no relevant distribution relieved local authorities and other statutory undertakers in that position of most of the Profits Tax burden. While this had been going on, in 1947 there were brought into the scope of Profits Tax Industrial and

Provident Societies which are mentioned in the third of the Amendments which we are discussing with the Amendment I have moved. They were also taxed at the lower rate, that is to say at the time when the change was made they would have paid only 2½ per cent.
Lastly, there is mentioned, in the last Amendment which we are also discussing, a particular type of the bodies which have been mentioned in the second of these Amendments — the non-profit making bodies—that is to say, sports associations, many of which are carried on in that way for non-profitable purposes and yet attract what is now miscalled Profits Tax. Also, there is the Amendment which is the second of those to be discussed with the one I have moved about which I will say a word in a minute.
It is true—let us face it at once—that the Royal Commission, considering this subject at a time when there were two rates of Profits Tax, recommended that these bodies should all be treated like other profit makers. It is a fair recommendation in some ways, because there is an essential difference between all these bodies and ordinary profit-making bodies, with which the Royal Commission was principally concerned.
I want to call the Committee's attention to the effect of some of these things. There is no doubt that local authorities at present are meeting very serious financial difficulties. They are meeting those difficulties because of matters which I cannot go into at any length tonight. One obvious one is the general grant and the effect it has on the finances of local authorities. Another is the complete stoppage of housing subsidies for ordinary needs.
Yet a third, and the one which dominates everything and which is the most relevant to what we are considering tonight, is that it is Government policy that rates of interest should be high. Since local authorities have to borrow for practically every service they perform for the public and which they alone can perform, they have to pay, and therefore ultimately the public and the ratepayer or the rent payer have to pay a good deal more than they would under the comparatively low rates of interest which prevailed when the Labour Government were in power. I have taken 3


per cent., which is about right, as the figure which then ruled.
My hon. Friends have suggested in the Amendment in line 7 relating to local authorities that, so long as they have to pay these rates, which are so much higher than they had to pay when the Labour Government were in power, they at any rate should not be bidden to carry the increased rate of Profits Tax brought into being by the Clause.
Our plea on their behalf and on behalf of the other bodies is simply this. If in order to hold back the economy, to summarise what I think is the right hon. Gentleman's policy in these matters, Profits Tax is increased for the time being, what one must be thinking of are the profits which have increased so enormously in recent years in the case of limited companies and others carrying on profit-making transactions. It is that kind of profit with which the Profits Tax is normally concerned. There has been no corresponding increase—very much the contrary—in the activities of local authorities and in one or two other cases which I shall mention shortly.
I understand that right hon. and hon. Gentlemen opposite are great devotees of sport. The Chancellor of the Exchequer, when he is not watching the pigeon laying an egg outside his room is actively occupied in sailing, and we wish him well in doing so. He sails in company, and others play games in company. I ought not to have to stand here and urge the Conservative Party not to treat as profit-making bodies a number of sports associations and the like which are nothing of the sort and which are not making exorbitant or indeed any profits and are not contributing to inflation or however one describes the economic condition which the Chancellor at the moment is desirous to check a little. They are no sinners in this respect.
Local authorities are sufferers in this respect, because the result of inflation is that, when they are bidden to go on to the market to borrow or when they are driven to the Public Works Loans Board, they have to pay a rate which tends to rise and has in fact risen with the increasing profits, some of which are profits of other bodies which are caught by Profits Tax. They are the very lase people to be made to pay an increase of this kind.
I have not said much about co-operative societies. They are not able to make profits as a limited company does. [Laughter.] They certainly are not. Their dividends are discounts and are treated as such for taxation purposes. Their position is entirely different from a profit-making limited company or a profit-making individual or partnership. It has always been so recognised for tax purposes. Hon. Gentlemen opposite should go back to the hard times of the early nineteenth century when the Rochdale pioneers started the Co-operative movement as it now is, not in order to make profits but to get their goods cheaply by co-operative buying and selling.
That is still the foundation of the Co-operative movement. It is not right that co-operative societies should have to pay this increase, too, but I must leave it to my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling), if he is fortunate enough to catch your eye, Sir William, to develop something which has been said in this Chamber before in previous debates on Finance Bills and certainly merits saying constantly, because the noises which I heard from hon. Gentlemen opposite a minute or two ago indicate that some hon. Gentlemen opposite have not yet realised the nature of the Co-operative movement. It is high time that they did so.
For all those reasons, while recognising that this is an adaptation of Profits Tax to some extent for particular purposes, the increase being made for one national purpose now ought not on the merits of the case to be extended to these cases.

Mr. Michael Stewart: I think it has been agreed that in discussing this Amendment we may, at the same time, discuss those immediately following it. I wish, therefore, to direct the Chancellor's attention to—and, I hope, get his favourable consideration of—the Amendment in page 50, line 7. That Amendment links the proposed increase of Profits Tax as it affects local authorities to the interest rates that local authorities have to pay. It suggests that while those interest rates remain at their present high level this Clause should not apply to local authorities.
Nobody now disputes the severity of the pressure that interest rates exert on local authorities in carrying out work


that they cannot avoid, even if they would. Perhaps I may be allowed to give just one illustration of that burden. The rent one would have to charge for an average council dwelling is today 15s. higher than it was in 1951, but of those 15s. only 1s. is the result of the building costing more to erect. The other 14s. are all due to the increase in interest rates between 1951 and today. When it is suggested, as it sometimes is, that dwellers in council dwellings enjoy a large subsidy at the expense of the community we should remember how large a part of that subsidy goes to the payment of these high rates of interest. It is the persons who receive that interest who are the real beneficiaries of the subsidy.
It is not, of course, only housing that is concerned, although I have quoted it as an example. Other examples may be mentioned by my hon. Friends. In other kinds of local authority work—the building of schools, the erection of buildings concerned with those parts of the health and welfare services for which the local authorities are responsible—the same heavy burden of increased interest rates has to be borne, and recent legislation is obliging local authorities to carry out building works for new purposes. There are, for example, the new duties imposed on local authorities by the Mental Health Act.
It might be urged that we should not, by passing this Amendment, show a special favour to local authorities. My answer would be that enterprises that take profits and pay tax are of a great variety. They produce various commodities and services. We might all have our own opinions as to the usefulness to human welfare or civilisation of the whole range of goods and services produced by industry, private and public. We may each consider that some make our civilisation richer and nobler while others degrade it. But the special feature of local authority work is that everything those authorities do is something that needs to be done for the maintenance of the kind of civilisation in which we want to live. Therefore, they are bodies that can claim tax treatment rather different from that of the general run of those that produce goods and services and have to pay excess Profits Tax.
When, in other debates, we have urged that local authorities ought to be helped by being charged a lower rate of interest than that which other operators have to pay, the stock reply given to us is that we cannot insulate local authorities from whatever economic storms may rage. There is an answer to that argument, but I shall not develop it now. I say only that if the Government stick to the view that they cannot come to the help of local authorities by reducing interest rates they should surely concede that this is not the moment actually to add to the burdens of local authorities, which is what the Clause would do if it became law without our Amendment. We are not asking for very much. We are not asking on this occasion that the burden should actually be lightened. We are asking merely that it should not be increased, in view of its present weight
.
9.45 p.m.
The burdens on local authorities arise not only from the interest rates but from Government policy in regard to grants and rates. At Question Time this afternoon, I tried to find out whether the Government still stick to the policy with regard to grants and rates which they announced a few years ago, before the Local Government Act was passed. The policy then announced in a Government White Paper was that out of all expenditure that local authorities had to meet the proportion met by Exchequer grants ought to be reduced. That, in effect, was what the White Paper said.
The Minister of Housing and Local Government has since prided himself on the fact that the general grants so far made have been such that he could plead that the Government had not yet carried out the policy in the White Paper. When I questioned him today, as hon. Members who were present at the time will recall, it was quite impossible for me to elicit a straight answer to my question. Government policy, therefore, with regard to Exchequer assistance by way of grant to local authorities remains obscure but menacing.
In words in the White Paper, local authorities are told that the Government intend to reduce that portion of their expenditure which is met by grants, putting a heavier burden on the rates. The Minister for the moment prides


himself on the fact that he has not done it yet. But while it is there as a statement of Government intention, not repudiated, it is bound to add to the anxieties of local authorities. I pray that in aid as an additional reason, apart from the burden of interest rates, for saying that the Chancellor should take this opportunity to avoid actually adding to the burdens of local authorities at this time.

Mr. Mitchison: On a point of order, Sir Gordon. I apologise to you for forgetting to ask whether new Clause No. 47, "Reduction of rate of Profits Tax in certain cases", could be considered with this group of Amendments. It is designed to introduce a reduction of the rate of Profits Tax in the case of co-operative societies, and I think it might go conveniently with the Amendment designed to provide that, at any rate, it should not be increased

The Chairman: I am much obliged to the hon. and learned Gentleman. I think that that would be for the convenience of the Committee.

Mr. Ellis Smith: I desire to support the three Amendments, the one to which my hon. Friend the Member for Fulham (Mr. M. Stewart) has spoken, the one dealing with the Co-operative movement, and the one dealing with sports associations which are non-profit making concerns.
Hon. Members who have read the latest publication issued by the National Institute of Economic and Social Research will, from the analysis made there, understand the Government's policy in this matter. I accept that that is so. I do not agree with it, but, from a reading of publications of that kind, one can readily understand what the policy is. What I cannot understand, however, is the Chancellor being a party to the financial strangulation of local democracy. There are thousands of public-spirited men and women who have served our country as loyally as most of us. Many of them have a very great record in war. They have not talked as some people have done about selectivity in conscription; they have also played their part in war. The same applies to the sacrifices that they have made in the concrete application of local democracy. At the present time they

are simply broken-hearted. They can do nothing at all worth talking about, such is the financial strangulation of the Chancellor's policy with regard to local democracy.
Let me give one example. This applies to other places. It is only a matter of degree, but I am speaking only of the city I know most about. It equally applies to Salford and other places. In the City of Stoke-on-Trent we have, relatively speaking in regard to the population, the finest housing record of any area in this country. I admit that there was a great need for that record owing to the past neglect of those who had governed and owned the city in the past. But I am not raising that. I am dealing with the fact that since the end of the war Stoke-on-Trent has the finest housing record relative to the population of any area in this country. That has aroused great pride locally. Large numbers of people used to come to the city and look at the estates. They still do so. Unfortunately, they cannot see any new estates that have been built within the last twelve months because of the financial strangulation policy of the Chancellor.
The result is that men and women, like my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater), on that city council, who have devoted their lives to that area and who want to carry on this kind of work, cannot build any number of houses worth talking about. It is true that there is a certain amount of slum demolition and replacement taking place, but, compared with the past, very few houses are being built now, owing to this financial strangulation. What makes me smart is that we have been involved in two world wars which we have won, yet Germany has adopted the policy of cheap land and cheap money in order to provide the maximum—

The Chairman (Sir Gordon Touche): I am sorry to interrupt the hon. Gentleman. I think that he is getting rather wide of the Amendment.

Mr. Mitchison: On a point of order. Is not my hon. Friend quite right, if not on cheap land, at any rate on cheap money? It is a point in one of the Amendments. I would suggest that, while one cannot go far into conditions


in Germany, reference to the rates of interest for the local authorities there may be relevant.

The Chairman: It was not particularly in regard to the reference to Germany, it was the general background which was rather wide.

Mr. Ellis Smith: I am being very careful, Sir Gordon, to speak only within the limits of these Amendments. I am not making a Second Reading speech. I am being very careful, having had some experience in Committee on Finance Bills. If you would be good enough to look at the Amendment in page 50, line 7, I am sure that you will see the case I am building on with regard to this matter. The point that I was making was that, whereas what I am advocating is being done in Germany, although we won the war it is not being done here.
I think that the time has come when the Chancellor should make a statement on this matter. Everyone knows what I think of the Minister responsible for this state of affairs and the least said about that the better. Local democracy is expecting a reasoned statement from the Chancellor as to why this policy which is preventing local democracy functioning is being applied.
My hon. Friends will be speaking about the co-operative societies. I shall be satisfied if they do justice to them because, although I am not a direct representative of the Co-operative movement, I take second place to no one with regard to the time that I have spent being cradled in the Co-operative movement.
Previous Chancellors of the Exchequer, particularly the present Leader of the House, have always been very sympathetic when we have raised points about sport. It is generally accepted that here we are dependent upon voluntary associations, and up to now it has enabled us to play our part and largely to hold our own in world competition in sport. However, many sporting activities are finding it increasingly difficult to keep going. Now that concessions have been made in certain parts of the world of entertainment and sport, we believe that they should be applied to all voluntary organisations of the kind that come within the terms of the Amendment.
I therefore hope that the Chancellor will make a reasoned statement on these points. Even if he cannot accept them, it is right that we should make our position clear and put it on record.

Mr. Frank Allaun: I am one of those who believe that these three types of organisation—co-operative societies, local authorities and nonprofit-making sports organisations—should not pay any Profits Tax. Local authorities provide a service for the whole population within their areas. Why should they be subject to Profits Tax? In my opinion, it is as daft as suggesting that the Army, Navy and Royal Air Force should pay Income Tax. The same principle applies. It is very unfair that the Chancellor should go further and suggest that it should be increased.
Many of my hon. Friends, I think, would be prepared to say to the Chancellor, "By all means increase the Profits Tax if you are prepared to reduce the interest rate to 3 per cent." That would be some compensation for the injury that has been done. I maintain that the Chancellor, who seems to be a very nice, kindly man, has done a terrible injury to millions of families by the policies which he has inaugurated. His financial policies are causing tremendous suffering, and this does not go with his character. We should protest on every possible occasion against what the right hon. Gentleman is doing.
The figure mentioned in the Amendment is 3 per cent. That was the interest rate which operated up to 1951. As the Chancellor knows, it is now 5⅞ per cent. This has had a colossal effect. As the Chancellor knows, a £1,500 house—these figures are engraved on my heart as Calais was engraved on the heart of Mary Queen of scots—[Laughter.] I have got the wrong Mary. By the time that a local authority has paid interest at 5¾ per cent. over sixty years on a £1,500 house, it will have paid £5,350. Subsequently, there has been an additional one-eighth of 1 per cent. Last week, the Chancellor refused to give a guarantee that there would not be a further increase.
10.0 p.m.
The result of this is simply that in 1954 we were building 240,000 houses a year, but last year we built exactly half


this number. That is the result of the Chancellor's financial policy. We are asking him to return to the 3 per cent. rate which at one time was applicable.
I do net know whether the Chancellor realises what effect his policy is having. Does he know that at this moment, at ten o'clock in the evening, large numbers of children in our big cities are having to leave their parents' homes to go and sleep in other people's houses because there is no room for them in their own houses, which are so overcrowded? They have little hope of any improvement as long as this high interest rate applies.
That is the result of the Chancellor's policy. It is breaking up homes and it means that families who have been on the waiting list for fifteen years are still without houses and without a chance of getting them as a result of this policy. Therefore, in our Amendment we say that so great an injustice has been done by the Chancellor's financial policies that this additional injustice should not be done.

Mr. A. E. Oram: I should like to say a few words in support of the Amendment and the new Clause dealing particularly with industrial and provident societies. This is the third year that we have discussed this issue. It is not the first time that we have urged that the Chancellor should put right the injustice which he did two years ago to the Co-operative movement. It arose from his Budget in 1958, when he decided to combine the existing two rates of Profits Tax at 3 per cent. and 30 per cent. and to make one rate of 10 per cent. On each occasion when he has argued the case on behalf of the Co-operative movement, the Chancellor has come back with the reply, which, I have no doubt, we shall hear again tonight, that it is a simple case of competing trade organisations and that his method applies the tax equally to all trading organisations.
The financial structure of an industrial and provident society is very different from that of a public company. In our judgment, that difference in financial structure justifies a different approach from the viewpoint of the Profits Tax. The Chancellor himself has admitted that there is a vital difference in the nature of a co-operative society by comparison with a company. The difference was recog-

nised as long ago as 1947, when the Profits Tax was first introduced. It was recognised by the Royal Commission on the Taxation of Profits and Income, and it was recognised by the Chancellor himself in the 1958 Budget, when he made what he called a concession in allowing co-operative societies to deduct for purposes of assessment to Profits Tax interest paid on their share capital.
In doing that, the Chancellor recognised that the two things were fundamentally different. He said that he was making a concession to the Co-operative movement by allowing that deduction. In fact, he was doing no more than justice—indeed, belated justice—to the Co-operative movement, because, as the Royal Commission pointed out, the share capital of a co-operative society is almost the exact equivalent of loan capital in a company. The concession was no more than giving equality of treatment to the loan capital of companies which they had enjoyed ever since 1947. Therefore, it was no concession but was merely belated justice.
Our argument is that we want justice in respect of the Profits Tax on the reserves of co-operative societies. We objected, and I think rightly, to the fact that the rate was raised from 3 per cent. to 10 per cent. in one fell swoop, and we equally protest now when it is proposed to raise it from 10 per cent. to 12½ per cent. I ask the Chancellor, who in other connections has often made sympathetic noises about co-operative societies, to consider who it is that makes up the Co-operative movement.
It is about 13 million people at the lower end of the income scale, and they are people who are not able to produce large sums of capital for their co-operative societies but on average about £20 per head. For that reason, a co-operative society in seeking capital for carrying on its business is at a considerable disadvantage in comparison with ordinary companies. Its people who are shareholders or members are not in a position to subscribe, as shareholders of companies are able to subscribe, large quantities of capital for the running of their trading organisation.
Even if they were rich enough so to do, the Industrial and Provident Societies Acts set a limit of £500 on capital of that kind. We therefore say


that the two organisations are completely different and that they should be differently treated in respect of Profits Tax. Since the collection of capital from the members is so much more difficult than is the getting of shares from the shareholders of a company, the collective provision of capital, that is the ploughing back of profits into the organisation, is much more im-important to and much more difficult for a co-operative society to do.
It has been admitted by the Chancellor and by those who have investigated these matters that the distributions which co-operative societies make are completely different in kind from the distribution of profits made by companies. The so-called "divi" of the co-operative society, it is agreed, is not a distribution of profit. It is a reduction in price, a deferred rebate, and the interest on the shares of a co-operative society, it is also agreed, is the equivalent of interest on the loan capital of an ordinary company. Therefore, in a co-operative society the Profits Tax falls entirely on the amount of money put to reserve. It follows that an increase in Profits Tax and indeed the whole imposition of Profits Tax on the reserves of co-operative societies give a positive incentive to management committees to distribute their surpluses rather than plough them back, and I am sure that the Chancellor at no point wished to encourage distributions in that way.
In the case of companies, under the old system when there were differential rates as between the ploughing back and the distribution of profits there was a positive disincentive to distribute and an incentive to retain profits within the organisation. But two years ago, when the Chancellor decided to combine the rates, it made no difference to a company whether it ploughed back or distributed its profits, because the same rate of taxation was applicable in either case. It was left to the company to decide, and there was no incentive either way. But the way in which that has worked with the co-operative societies, because for them the Profits Tax is entirely on their reserves, it is to give a positive incentive to distribute rather than to retain, and I cannot imagine that the Chancellor ever intended that his combining of the Profits Tax rates should have that effect.
I have been speaking very much with consumer retailer co-operative societies in mind, but, as I have argued on previous occasions, they are not the only organisations which are hampered and handicapped in the way we have suggested. Agricultural co-operatives, which on other occasions the Chancellor has pretended to befriend, find the Profits Tax a particular handicap. Only a few months ago, the House passed the Horticulture Act, specifically designed to encourage the setting up of horticultural co-operatives. In discussions on that Measure it was brought to the attention of the Minister of Agriculture that horticultural co-operatives found it difficult to get capital together. We were given to understand that the Government were sympathetic to the idea of amending the Industrial and Provident Societies Acts so as to raise the share limit of £500 to £1,000 in order to help agricultural co-operatives. That is a very desirable Amendment of the law, and we hope that it will come about.
However, if that is the Government's attitude to co-operative societies in that case, surely it is the opposite of common sense and the opposite of justice to have a tax law which acts in precisely the other way. Therefore, on behalf of the 13 million strong consumer Co-operative movement and on behalf of the smaller but growing and important agricultural Co-operative movement, I hope that the Chancellor will have different thoughts this third time from those which he has expressed previously.

Mr. John Stonehouse: My hon. Friend the Member for East Ham, South (Mr. Oram) has already made the case in favour of the Amendment, but I want to underline some of the things he has said. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), speaking on a previous Amendment, said that local authorities were local democracies. The same could be said of co-operative societies. They are local democracies in that they are run and operated by consumers on the basis of "one shareholder, one vote", and there cannot be any exploitation through or by a co-operative society. They are quite unlike commercial companies to which the word "profits" usually applies.


There are no profits in co-operative societies. They make surpluses—[Laughter.]—verysubstantial surpluses. According to any business standards, they are very successful enterprises. They have built themselves up from very small beginnings and now have a trade of more than £1,000 million a year. They have made outstanding progress in some matters. With milk, for instance, they have made tremendous headway. In 1935, about 20 per cent. of milk sold through retail distribution was sold by co-operative societies, but that figure has now increased to 35 per cent., showing how efficient they are and how much they appeal to consumers. However, with co-operative societies there is no exploitation in the sense that there is exploitation by business enterprises and ordinary commercial companies. Co-operative societies, therefore, warrant treatment different from that given to ordinary commercial undertakings.
10.15 p.m.
We rest the case for the Amendment on the quite fundamental and simple point that there are no profits in the orthodox sense within co-operative societies. The surpluses are distributed to consumers and encourage thrift by millions of householders. Unlike private concerns, there are no capital gains, and any ploughing back does not favour just a few shareholders but is for the benefit of all the consumers. The investors in shares in co-operative societies cannot make capital gains at the expense of the rest of their fellow co-operative members. On those grounds, we urge the Chancellor to reconsider his attitude towards industrial and provident societies.

Mr. Crosland: I rise for one minute only in view of the slightly ribald laughter from hon. Members opposite which greeted my hon. Friend the Member for Wednesbury (Mr. Stonehouse) when he drew a distinction between profits and surpluses. In his Budget speech, the Chancellor said that the object of the increase in Profits Tax was to curb not investment but consumption. He had it in mind that the increase in the Profits Tax would primarily restrain the increase in capital values on the Stock Exchange. No such increase can take place with the shares of co-operative societies and, therefore, it is wholly illogical from the point of view

of the purpose which the right hon. Gentleman said that he had in mind that this higher impost should fall on co-operative societies.

Mr. Amory: We have before us a group of Amendments which seek to protect certain classes of trading concerns against the increase in the rate of Profits Tax from 10 per cent. to 12½ per cent., and a new Clause designed to reduce the rate on co-operative societies to 3 per cent. The Amendments apply to trades or businesses carried on by local authorities, by bodies which cannot make what are called relevant distributions, by co-operative societies, and sports associations. If the Amendments were adopted, all those concerns would continue to be charged to Profits Tax at 10 per cent.
In considering the arguments, we must keep before us the nature of the Profits Tax. This is a tax on the profits of trades or businesses carried on by corporate bodies or unincorporated societies, and those seeking special treatment for the profits of particular bodies within this class must make out their case against that background.
I would make a few preliminary comments. First, there is no doubt that the bodies referred to in the Amendments are carrying on trades or businesses. If they are not, they are not within the charge to Profits Tax. Secondly, there is no doubt that they make profits. If they do not, they do not have to pay Profits Tax. Thirdly, if the profits of the trade or business are small the Profits Tax law already provides relief from the tax. Broadly speaking, if the profits in any year are less than £2,000 they are exempt from Profits Tax, and if they are between £2,000 and £12,000 they are abated by one-fifth of the amount by which they fall short of £12,000. These exemption and abatement provisions apply to the bodies referred to in the Amendments, as they do to all others. I mention this in order to stress that some relief is already available where the profits of the trade or business are small.
In the course of the debate reference has been made to the history of Profits Tax. Between 1947 and 1958 the rates were heavier on profits that were distributed as dividends, and special provisions applied to the bodies mentioned


in the Amendments. Building societies, for instance, then paid a special rate, and nationalised industries, local authorities co-operative societies and sports associations paid at the lower rate. But in 1958 that scheme of Profits Tax was abolished, in accordance with the recommendations of the Royal Commission, and was replaced by a flat-rate tax. Accordingly, all these special provisions as to rates became obsolete and, as the Commission again recommended, were swept away.
It would be outside the scope of the Amendments to go into the arguments for and against the flat rate, and I will not do that. The question was fully debated by this Committee in 1958. The question we are now asked to consider is whether certain bodies should be subject to Profits Tax at a special rate of tax on their trading profits.
As I have said, the present scheme is based on the recommendations of the Royal Commission. I would not wish to give the impression that a quotation from the Royal Commission's Report can be quoted ex cathedra as finally disposing of the question, but when it expresses a view with which I wholly agree I cannot do better than quote what it says. In paragraph 562 of its Final Report it says:
The main principle that we wish to see adopted is that a tax on the profits of corporations should apply to all profits without distinction between corporations the ownership of which is vested in the State and other corporations, or between corporations formed to serve public purposes and those formed to serve private purposes. It seems to us that only by an impartial distribution of the tax whenever and wherever profits are found can there be a fair balancing of costs and prices between the public and private sectors of industry and commerce. And if these factors are not balanced fairly the true relationship between these different activities in respect of their development is itself disturbed.
That is the basis on which the present scheme of Profits Tax operates. That is the reason why I cannot commend the Amendments to the Committee.
It has been argued in relation to bodies covered by the Amendments that special treatment is justified because they have no equity shares and it is impossible to make a capital profit out of them. I am by no means convinced that factors of this kind have any bearing on the question of the rate at which a

body ought to be taxed on its current trading profits, but let us consider the position of a body which cannot make dividend distributions. Such a body is presumably financed by loan capital. Interest on loan capital is a deduction in computing profits for Profits Tax purposes, and such a body therefore pays the tax on its retained profits only. On the other hand, a body which can pay dividends pays tax not only on its retained profits but, also on its dividends.
It seems to me, therefore, that the special features of bodies which cannot make dividend distributions are fairly met by the present law. If we discriminate in, their favour any more it would not be fair to the other bodies with whom they compete.
Again, it has been suggested that we should have regard to the nature of the service provided by the body carrying on the trade or business, and that if it is providing a necessary public service it should be charged at a lower rate. On this point I would only say that if the nature of the service provided is to be taken into account, that would lead us into a very wide field, and many other concerns than those mentioned in the Amendments would have to be considered. What would be the position of companies engaged in the manufacture of necessary foodstuffs, medical supplies, chemical fertilisers and so on? Where would companies heavily engaged in the export trade stand among such priorities? I am sure that in a matter of taxation we cannot distinguish between the profits of different organisations according to somebody's estimate of the value of their activities to the community. It is far too difficult an assessment to make.
As regards co-operative societies, the point I have made about bodies which cannot make distributions applies here. In computing their profits for Profits Tax purposes they are allowed to deduct the interest paid on shares so that they pay the tax only on their retained profits. They are in direct competition with companies in the same line of business, and it would be impossible to justify charging them to Profits Tax at any rate—whether it be 10 per cent. or 3 per cent.—other than the rate imposed on their competitors.
Though I know that most of us have a regard for our national games, there would be very grave difficulties in drawing a line which would fairly discriminate in their favour on any trading profits they made. The same sentiment could led us into giving an enormous number of other exemptions for equally desirable reasons.
I am sure that we all must try to keep our taxation basis on clear principles, and the principle of Profits Tax is perfectly clear. It is charged on the profits of trades or businesses carried on by bodies corporate and similar bodies. It is not charged on the trading results of individuals, but they are liable to Surtax on their profits. If we now get away from that clear principle and start modifying the rate of tax according to the nature of the trade or the business which is carried on, or the nature of the body that carries it on, we shall be led into a very deep bog indeed.
I should like to refer to the remarks made by the hon. Member for Fulham (Mr. M. Stewart) on interest rates. There again, we have to remember that he was speaking of local authorities. Profits Tax will arise on the profits they make, and in many of their trading activities they may find themselves in competition with other industries, and it would not be fair to isolate the trading activities of local authorities from the competitive rates, both in interest and in Profits Tax, that their competitors have to carry.

Mr. Mitchison: The right hon. Gentleman will remember that when they were exempted originally it was for statutory undertakings, when there was no question of competition, and it included, for instance, the supply of water and transport.

Mr. Amory: Yes, but the Amendment seems to go wider than that, and the Royal Commission again considered that with the flat rate of Profits Tax it was recommending there would be no justification for exempting even statutory undertakings.
The hon. Member for Stoke-on-Trent, Central (Mr. Ellis Smith) went a little wide of the Amendment, and again I would remind him that here we are dealing with trading activities and not neces-

sarily with housing in general. But on housing in general I would again remind him that currently the total number of houses being built—and that is surely the important thing—is running at a rate of upwards of 300,000 a year, and of course at a very much higher rate than in the days when hon. Gentlemen opposite were in power. It is clear that at the present time the house building industry is working at full capacity.

Mrs. Harriet Slater: Is it not also fair to make the comment that, although the number of houses being built now is higher than before, that does not apply to houses being built by local authorities, because of Government policy?

Mr. Amory: I should have thought that from the national point of view the important thing was to get good quality houses built and to house as many families as possible, but there I think there may be disagreement between hon. Gentlemen opposite and ourselves, and I am sure, Sir William, that you would not wish us to discuss that this evening.
Finally, may I say a word about a remark made by the hon. Member for Salford, East (Mr. Frank Allaun), who very politely alleged that by my economic policies I was doing great damage to millions of families. I would remind him that the object of my economic policies is, above everything else, to avoid a return to inflation. They have helped to ensure that we have over the past two years enjoyed complete stability in prices, and I would have thought that that was not of great damage to millions of families but of very great benefit to them.
For the reasons that I have given, I think it would be a very great mistake if the Committee decided to adopt the Amendment, and I hope hon. Members will allow the Clause to stand as it is.

10.30 p.m.

Mr. Charles Loughlin: Would the right hon. Gentleman explain what is the difference in relation to inflation if council house rents rise by 15s. a week or prices of goods rise by the same extent? Is it not equally inflationary if council house rents are increased?

Mr. Amory: There has been complete stability in the cost of living and rents are taken into consideration in the price index. As long as we can maintain complete price stability, we are doing the best we can to avoid the risk of a return to inflation.

Mr. George Darling: I think that all of my right hon. and hon. Friends would agree that the Chancellor has not only made a disappointing speech, but in repeating the arguments which we demolished last year and the year before he is not treating the points that we have brought forward in the way in which we think they should be treated. He suggests, for instance, that the principle of Profits Tax is that it is a tax that must be levied on all trades and businesses which make profits, that no distinction must be made as to the character, the legal status on the purpose of the business, and how the profits are made or distributed.
There are great differences in the way that profits are made. There are great differences in the effects of the profits upon businesses and the people associated with the businesses, and, what is most important of all, there are great differences in the legal status of the enterprises with which we are dealing. To dispose of all these differences as if they did not exist is to look at the problem without the proper care that the issue requires.
We deeply regret that he offers no help to local authorities. When the right hon. Gentleman suggests that local authorities' trading activities have got to be treated in the same way as trading activities of other businesses because they are in competition with each other, again he is surely making a mistake in the legal character of the operations and in the purpose and the results of the operations. Many of these local trading operations are public services in which the local authority has a statutory monopoly and is not engaged in competition at all. Therefore, to suggest that they have got to be taxed in the same way seems to us to be flying in the face of the facts.
As my hon. Friend the Member for Grimsby (Mr. Crosland) said, one of the fundamental issues here is the purpose for the increase in the tax that the Chancellor is proposing this year. He pro-

poses to raise the Profits Tax because, as we see it, as a result of his previous financial measures, company profits have been rising substantially and the proposed tax is offered as a check to this inflationary trend. We are not opposed to his putting a check on inflationary trends, though we think that the better way to do it in this case would have been a higher tax on distributed profits and a lower tax on profits put to reserve.
I regret to say that we cannot debate that point now, but we protest at the fact that the Chancellor is putting this check on inflation on trading organisations which have not contributed to the inflationary trend. We have been debating this matter for three years, and I regret that we have to go over the same ground again, but we must continue until we have succeeded in getting our point of view over to the Chancellor, as I am sure we shall in time. He is pretending that he can see no difference between the trading profits, for instance, of co-operative societies which are put to reserve by those societies, and similar bodies, on the one hand, and the profits of private and public companies, on the other hand. He thinks that the provisions of the Industrial and Provident Societies Act and the Companies Acts are precisely the same.
The Statutes can be called in aid to prove that he is quite wrong. There is a great deal of difference—he mentioned it in passing tonight, without going deeply into it—between the equity shares of a joint stock company and the nontransferable fixed value shares of a co-operative society. My hon. Friends have pointed out an important factor—the capital gains element in equity shares which cannot be earned by shareholders in co-operative societies.
We must point out, because this is fundamental, that it does not matter how much a co-operative society puts to reserve; its reserves make no difference either to the value of its shares or to the rate of interest paid upon them. The Chancellor admitted that the amount put to reserve makes no difference to the value of the shares, but he did not mention the very important point that it does not affect the rate of interest paid on the shares, either. A £1 share is worth £1 whether the co-operative society is flourishing and putting a lot of money to reserve or whether it is just ticking


over. That is a fundamental difference from the position of share capital in a company registered under the Companies Acts.
In spite of these manifest differences between equity shares and co-operative society shares, the Chancellor insists that they are similar in law and in purpose and in the returns which they bring to the shareholders and therefore persists in saying, in spite of all the facts to the contrary, that those profits are similar and must be treated in a similar fashion.

Mr. Amory: They are not similar in the return which they bring to the shareholder.

Mr. Darling: We can deal with that argument then, because if he admits that there is a great deal of difference in the return which they bring to the shareholders, surely we can build up the case that they should be differently treated in regard to taxation.

Mr. Amory: The fact that they do not bring the same return to the shareholders is the reason why the Royal Commission recommended, and we are giving them, different treatment for Profits Tax purposes. The interest on the shares is allowed as a charge instead of being treated as a dividend. That is the point I tried to make.

Mr. Darling: We do not agree with the Royal Commission's conclusions in the few paragraphs which it devoted to Profits Tax on co-operative societies. I think the Chancellor would agree, if he were not discussing this in a partisan spirit, that the Commission's Report is not very clear in the paragraphs which deal with the matter. He goes on saying, as he said last year and this year, that only the balance of the profits put to reserve are charged to tax and that it would be unreasonable for one class of trader to be charged on such profits at 3 per cent. while another is charged at 10 per cent. when the two may be in competition. That is the argument he is putting forward.
We want to know why differential taxes would be unreasonable. Last year he admitted that the effect of his higher uniform rates increased the liability of

co-operative socities to taxation by £1,300,000 while other traders, as a result of his tax arrangements, received tax reductions. The 2½ per cent. that he is proposing this year will make the liability of co-operative societies, as against the position as it was before, equal to a tax increase of £1¾ million a year. That is a tax increase which is discriminatory. It applies only to co-operative societies as compared with the situation before the rearrangement of the Profits Tax was made a year ago.
The Chancellor said then, and he has said tonight, that he introduced the uniform 10 per cent. tax on distributed and undistributed profits to make the tax simpler. He said that he brought the co-operative societies' undistributed profits into the 10 per cent. imposition in order to be fair all round. But what the right hon. Gentleman fails to understand is that in our view it is unfair to treat two dissimilar things as if they were precisely the same.
We are not asking for special favours for co-operative societies. All that we want it fair treatment. We believe that to be fair the treatment must take into account all the facts and circumstances. It is because we think that the Chancellor has ignored these facts and circumstances that we are going to carry our protest against this provision and his refusal to accept our Amendment into the Division Lobby.
The right hon. Gentleman has not taken into account the fact that the shareholding in co-operative societies is limited to £500. He ignores the small saver element in this and he has not taken into account the fact that undistributed profits make no addition to the value of the member's shareholding, and he ignores, too, the interest question. As long as the right hon. Gentleman goes on ignoring these matters he is not being fair in imposing this uniform tax on undistributed profits. We do not think that one can achieve fairness by trying to apply uniformity to things which are not uniform.

Question put, That those words be there added:—

The Committee divided: Ayes 129, Noes 199.

Division No. 104.]
AYES
19.14 p.m.


Aitken, W. T.
Gibson-Watt, David
Marten, Neil


Allason, James
Glyn, Dr. Alan (Clapham)
Matthews, Gordon (Meriden)


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Glyn, Sir Richard (Dorset, N.)
Mawby, Ray


Ashton, Sir Hubert
Goodhew, Victor
Molson, Rt. Hon. Hugh


Atkins, Humphrey
Gower, Raymond
Montgomery, Fergus


Barber, Anthony
Grant-Ferris, Wg Cdr. R. (Nantwich)
Morgan, William


Barlow, Sir John
Green, Alan
Nabarro, Gerald


Barter, John
Grimond, J.
Neave, Airey


Batsford, Brian
Grimston, Sir Robert
Nicholson, Sir Godfrey


Baxter, Sir Beverley (Southgate)
Hall, John (Wycombe)
Noble, Michael


Bell, Philip (Bolton, E.)
Hamilton, Michael (Wellingborough)
Osborn, John (Hallam)


Bell, Ronald (S. Bucks)
Harrison, Brian (Maldon)
Osborne, Cyril (Louth)


Berkeley, Humphry
Harrison, Col. J. H. (Eye)
Page, A. J. (Harrow, West)


Bevins, Rt. Hon. Reginald (Toxteth)
Henderson, John (Cathcart)
Page, Graham


Bidgood, John C.
Hendry, Forbes
Partridge, E.


Biggs-Davison, John
Hicks Beach, Maj. W.
Pearson, Frank (Clitheroe)


Birch, Rt. Hon. Nigel
Hiley, Joseph
Percival, Ian


Bishop, F. P.
Hill, Mrs. Eveline (Wythenshawe)
Peyton, John


Black, Sir Cyril
Hill, J. E. B. (S. Norfolk)
Pickthorn, Sir Kenneth


Bossom, Cilve
Hinchingbrooke, Viscount
Pike, Miss Mervyn


Bourne-Arton, A.
Hirst, Geoffrey
Pilkington, Capt. Richard


Bowen, Roderic (Cardigan)
Hooking, Philip N.
Pitman, I. J.


Box, Donald
Holland, Philip
Pitt, Miss Edith


Boyle, Sir Edward
Hollingworth, John
Pott, Percivall


Brewis John
Hopkins, Alan
Powell, J. Enoch


Bromley-Davenport, Lt.-Col. W. H.
Hornby, R. P.
Price, H. A. (Lewisham, W.)


Brooman-White, R.
Hornsby-Smith, Rt. Hon. Patricia
Prior, J. M. L.


Browne, Percy (Torrington)
Howard, Gerald (Cambridgeshire)
Prior-Palmer, Brig. Sir Otho


Builard, Denys
Howard, John (Southampton, Test)
Proudfoot, Wilfred


Bullus, Wing Commander Eric
Hughes-Young, Michael
Ramsden, James


Carr, Compton (Barons Court)
Hutohison, Michael Clark
Rawlinson, Peter


Carr, Robert (Mitcham)
Irvine, Bryant Godman (Rye)
Redmayne, Rt. Hon. Martin


Chataway, Christopher
Jackson, John
Rees, Hugh


Clark, Henry (Antrim, N.)
James, David
Rees-Davies, W. R.


Clark, William (Nottingham, S.)
Jenkins, Robert (Dulwich)
Ridley, Hon. Nicholas


Cleaver, Leonard
Johnson, Dr. Donald (Carlisle)
Ridsdale, Julian


Collard, Richard
Johnson, Eric (Blackley)
Roberts, Sir Peter (Heeley)


Cordeaux, Lt.-Col. J. K.
Joseph, Sir Keith
Roots, William


Corfield, F. V.
Kerens, Cdr. J. S.
Ropner, Col. Sir Leonard


Costain, A. P.
Kerby, Capt. Henry
Scott-Hopkins, James


Coulson, J. M.
Kerr, Sir Hamilton
Seymour, Leslie


Courtney, Cdr. Anthony
Kimball, Marcus
Sharples, Richard


Critchley, Julian
Kitson, Timothy
Shaw, M.


Curran, Charles
Lambton, Viscount
Shepherd, William


Currie, G. B. H.
Langford-Holt, J.
Simon, Sir Jocelyn


Dalkeith, Earl of
Leavey, J. A.
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


d'Avigdor-Goldsmid, Sir Henry
Legge-Bourke, Maj. H.
Smyth, Brig. Sir John (Norwood)


Deedes, W. F.
Legh, Hon. Peter (Petersfield)
Speir, Rupert


de Ferranti, Basil
Lewis, Kenneth (Rutland)
Stevens, Geoffrey


Donaldson, Cmdr. C. E. M.
Lindsay, Martin
Steward, Harold (Stockport, S.)


Drayson, G. B.
Litohfield, Capt. John
Stodart, J. A.


du Cann, Edward
Longden, Gilbert
Stoddart-Scott, Col. Sir Malcolm


Emery, Peter
Loveys, Walter H.
Storey, Sir Samuel


Errington, Sir Eric
Lucas-Tooth, Sir Hugh
Studholme, Sir Henry


Farey-Jones, F. W.
MacArthur, Ian
Summers, Sir Spencer (Aylesbury)


Farr, John
McLaren, Martin
Sumner, Donald (Orpington)


Fell, Anthory
McLaughlin, Mrs. Patricia
Talbot, John E.


Fisher, Nigel
Maclay, Rt. Hon. John
Tapsell, Peter


Forrest, George
McMaster, Stanley R,
Teeling, William


Fraser. Ian (Plymouth, Sutton)
Maginnis, John E.
Temple, John M.


Freeth, Dentil
Manningham-Buller, Rt. Hn. Sir R.
Thomas, Leslie (Canterbury)


Gammans, Lady
Markham, Major Sir Frank
Thomas, Peter (Conway)


Gardner, Edward
Marlowe, Anthony
Thompson, Kenneth (Walton)




Thompson, Richard (Croydon, S.)
Wakefield, Edward (Derbyshire, W.)
Wise, A. R.


Thorneycroft, Rt. Hon. Peter
Wakefield, Sir Waveil (St. M'lebone)
Wolrige-Cordon, Patrick


Thornton-Kemsley, Sir Colin
Wall, Patrick
Woodhouse, C. M.


Tiley, Arthur (Bradford, W.)
Ward, Dame Irene (Tynemouth)
Woodnutt, Mark


Turner, Colin
Watts, James
Woollam, John


Turton, Rt. Hon. R. H.
Wells, John (Maidstone)
Worsley, Marcus


Tweedsmuir, Lady
Whitelaw, William
TELLERS FOR THE AYES:


van Straubenzee, W. R.
Williams, Dudley (Exeter)
Mr. Finlay and Mr. Peel.


Vickers, Miss Joan
Wills, Sir Gerald (Bridgwater)



Vosper, Rt. Hon. Dennis
Wilson, Geoffrey (Truro)





NOES


Ainsley, William
Hughes, Cledwyn (Anglesey)
Probert, Arthur


Allaun, Frank (Salford, E.)
Hughes, Emrys (S. Ayrshire)
Randall, Harry


Awbery, Stan
Hughes, Hector (Aberdeen, N.)
Redhead, E. C.


Bacon, Miss Alice
Hunter, A. E.
Rhodes, H.


Baxter, William (Stirlingshire, W.)
Hynd, H. (Accrington)
Roberts, Goronwy (Caernarvon)


Bence, Cyril (Dunbartonshire, E.)
Irving, Sydney (Dartford)
Rogers, G. H. R. (Kensington, N.)


Benson, Sir George
Janner, Barnett
Ross, William


Blyton, William
Jay, Rt. Hon. Douglas
Short, Edward


Bowden, Herbert W. (Leics, S. W.)
Jeger, George
Skeffington, Arthur


Boyden, James
Jenkins, Roy (Stechford)
Slater, Mrs. Harriet (Stoke, N.)


Braddock, Mrs. E. M.
Johnston, Douglas (Paisley)
Slater, Joseph (Sedgefield)


Broughton, Dr. A. D. D.
Jones, Rt. Hn. A. Creech (Wakefield)
Small, William


Brown, Alan (Tottenham)
Jones, Jack (Rotherham)
Smith, Ellis (Stoke, S.)


Brown, Rt. Hon. George (Belper)
Jones, J. Idwal (Wrexham)
Snow, Julian


Brown, Thomas (Ince)
Kenyon, Clifford
Soskice, Rt. Hon. Sir Frank


Butler, Mrs. Joyce (Wood Green)
Key, Rt. Hon. C. W.
Spriggs, Leslie


Callaghan, James
Lee, Frederick (Newton)
Steele, Thomas


Chetwynd, George
Lewis, Arthur (West Ham, N.)
Stewart, Michael (Fulham)


Cliffe Michael
Logan, David
Stonehouse, John


Corbet, Mrs. Freda
Loughlin, Charles
Stones, William


Craddock, George (Bradford, S.)
Mabon, Dr. J. Dickson
Strachey, Rt. Hon John


Crosland, Anthony
McCann, John
Sylvester, George


Cullen, Mrs. Alice
MacColl, James
Symonds, J. B.


Darling, George
McInnes, James
Taylor, Bernard (Mansfield)


Davies, G. Elfed (Rhondda, E.)
McKay, John (Wallsend)
Thomas, George (Cardiff, W.)


Davies, Harold (Leek)
Mackie, John
Thomas, Iorwarth (Rhondda, W.)


Davies, Ifor (Gower)
Manuel, A. C.
Thompson, Dr. Alan (Dunfermline)


Davies, S. O. (Merthyr)
Marquand, Rt. Hon. H. A.
Thornton, Ernest


Deer, George
Mason, Roy
Tomney, Frank


Dempsey, James
Mayhew, Christopher
Ungoed-Thomas, Sir Lynn


Diamond, John
Mendelson, J. J.
Wainwright, Edwin


Dodds, Norman
Millan, Bruce
Warbay, William


Dugdale, Rt. Hon. John
Mitchison, G. R.
Watkins, Tudor


Edwards, Robert (Bilston)
Monslow, Walter
Weitzman, David


Fenyhough, E.
Morris, John
Wheeldon, W. E.


Fitch, Alan
Mort, D. L.
White, Mrs. Eirene


Fletcher, Eric
Neal, Harold
Wilcock, Group Capt. C. A. B.


Forman, J. C.
Noel-Baker, Fransis (Swindon)
Willey, Frederick


Fraser, Thomas (Hamilton)
Noel-Baker. Rt. Hn. Philip (Derby, S.)
Williams, D. J. (Neath)


George. Lady Megan Lloyd
Oliver, C. H.
Williams, Rev. LI. (Abertillery)


Ginsburg, David
Owen, Will
Willams, W. R. (Openshaw)


Gordon-Walker, Rt. Hon. P. C.
Padley, W. E.
Willis, E. G. (Edinburgh, E.)


Greenwood, Anthony
Pargiter, G. A.
Wilson, Rt. Hon. Harold (Huyton)


Hamilton. William (West Fife)
Parker, John (Dagenham)
Winterbottom, R. E.


Hannan, William
Paton, John
Woodburn, Rt. Hon. A.


Hayman, F. H.
Pavitt, Laurence
Woof, Robert


Herbison, Miss Margaret
Pearson, Arthur (Pontypridd)
Yates, Victor (Ladywood)


Hilton, A. V.
Pentland, Norman
Zilliacus, K.


Holman, Percy
Prentice, R. E.



Houghton, Douglas
Price, J. T. (Westhoughton)
TELLERS FOR THE NOES:




Mr. Mahon and Mr. Howell.

Division No. 105.
AYES
[10.42 p.m.


Ainsley, William
Hughes, Cledwyn (Anglesey)
Redhead, E. C.


Allaun, Frank (Salford, E.)
Hughes, Emrys (S. Ayrshire)
Rhodes, H.


Awbery, Stan
Hughes, Hector (Aberdeen, N.)
Roberts, Albert (Normanton)


Bacon, Miss Alice
Hunter, A. E.
Roberts, Goronwy (Caernarvon)


Baxter, William (Stirlingshire, W.)
Hynd, H. (Accrington)
Ross, William


Bence, Cyril (Dunbartonshire, E.)
Janner, Barnett
Skeffington, Arthur


Benson, Sir George
Jay, Rt. Hon. Douglas
Slater, Mrs. Harriet (Stoke, N.)


Blyton, William
Jeger, George
Slater, Joseph (Sedgefield)


Bowden, Herbert W. (Leics, S. W.)
Jenkins, Roy (Stechford)
Small, William


Boyden, dames
Jones, Rt. Hn. A. Creech (Wakefield)
Smith, Ellis (Stoke, S.)


Broughton, Dr. A. D. D.
Jones, Jack (Rotherham)
Snow, Julian


Brown, Allen (Tottenham)
Jones, J. Idwal (Wrexham)
Soskice, Rt. Hon. Sir Frank


Brown, Rt. Hon. George (Belper)
Lee, Frederick (Newton)
Spriggs, Leslie


Brown, Thomas (Ince)
Lewis, Arthur (West Ham, N.)
Steele, Thomas


Butler Mrs. Joyce (Wood Green)
Logan, David
Stewart, Michael (Fulham)


Callaghan, James
Loughlin, Charles
Stonehouse, John


Chetwynd George
Mabon, Dr. J. Dickson
Stones, William


Cliffe, Michael
McCann, John
Straohey, Rt. Hon. John


Corbet, Mrs. Freda
MacColl, James
Sylvester, George


Craddock, George (Bradford, 8.)
McInnes, James
Symonds, J. B.


Crosland, Anthony
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Cullen, Mrs. Alice
Mackie, John
Thomas, George (Cardiff, W.)


Darling, George
Mahon, Simon
Thomas, Iorwerth (Rhondda, W.)


Davies, G. Elfed (Rhondda, E.)
Manuel, A. C.
Thompson, Dr. Alan (Dunfermline)


Davies, Ifor (Gower)
Marquand, Rt. Hon. H. A.
Thornton, Ernest


Deer, George
Mason, Roy
Ungoed-Thomas, Sir Lynn


Dempsey, James
Mayhew, Christopher
Wainwright, Edwin


Diamond, John
Mendelson, J. J.
Watkins, Tudor


Dodds, Norman
Millan, Bruce
Weitzman, David


Dugdale, Rt. Hon. John
Mitchison, G. R.
Wheeldon, W. E.


Edwards, Robert (Bilston)
Monslow, Walter
White, Mrs. Eirene


Fernyhough, E.
Morris, John
Willey, Frederick


Fitch, Alan
Neal, Harold
Williams, D. J. (Neath)


Forman, J. C.
Noel-Baker, Francis (Swindon)
Williams, Rev. LI. (Abertillery)


Fraser, Thomas, (Hamilton)
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Williams, W. R. (Openshaw)


George, Lady Megan Lloyd
Oram, A. E.
Willis, E. G. (Edinburgh, E.)


Ginsburg, David
Owen, Will
Winterbottom, R. E.


Gordon Walker, Rt. Hon. P. C.
Padley, W. E.
Woodburn, Rt. Hon. A.


Hannan, William
Parker, John (Dagenham)
Woof, Robert


Hayman, F. H.
Pavitt, Laurence
Yates, Victor (Ladywood)


Herbison, Miss Margaret
Pearson, Arthur (Pontypridd)
Zilliacus, K.


Hilton, A. V.
Pentland, Norman



Holman, Percy
Probert, Arthur
TELLERS FOR THE AYES:


Howell, Charles A.
Randall, Harry
Mr. Irving add Mr. Short.




NOES


Aitken, W. T.
Corfield, F. V.
Harrison, Brian (Maldon)


Allason, James
Costain, A. P.
Heald, Rt. Hon. Sir Lionel


Amory, Rt. Hn. D. Heathcoat (T'v'tn)
Coulson, J. M.
Hendry, Forbes


Ashton, Sir Hubert
Courtney, Cdr. Anthony
Hiley, Joseph


Barber, Anthony
Critchley, Julian
Hirst, Geoffrey


Barter, John
Curran, Charles
Hocking, Philip N.


Batsford, Brian
Currie, G. B. H.
Holland, Philip


Baxter, Sir Beverley (Southgate)
Daikeith, Earl of
Hollingworth, John


Bell, Philip (Bolton, E.)
d'Avigdor-Goldsmid, Sir Henry
Hopkins, Alan


Berkeley, Humphry
Donaldson, Cmdr. C. E. M.
Hornby, R. P.


Bidgood, John C.
Drayson, G. B.
Hornsby-Smith, Rt. Hon. Patricia


Biggs-Davison, John
du Cann, Edward
Howard, Gerald (Cambridgeshire)


Birch, Rt. Hon. Nigel
Emery, Peter
Hughes-Young, Michael


Bishop, F. P.
Errington, Sir Eric
Hutchison, Michael Clark


Black, Sir Cyril
Farey-Jones, F. W.
Iremonger, T. L.


Bossom, Clive
Farr, John
Irvine, Bryant Godman (Rye)


Bourne-Arton, A.
Fell, Anthony
Jackson, John


Bowen, Roderic (Cardigan)
Finlay, Graeme
James, David


Box, Donald
Fisher, Nigel
Jenkins, Robert (Dulwich)


Boyle, Sir Edward
Forrest, George
Johnson, Dr. Donald (Carlisle)


Brewis, John
Fraser, Ian (Plymouth, Sutton)
Johnson, Eric (Blackley)


Bromley-Davenport, Lt.-Col. W. H.
Freeth, Denzil
Joseph, Sir Keith


Brooman-White, R.
Gammans, Lady
Kerans, Cdr. J. S.


Bullard, Denys
Gardner, Edward
Kerby, Capt. Henry


Bullus, Wing Commander Eric
Glyn, Dr. Alan (Clapham)
Kerr, Sir Hamilton


Butcher, Sir Herbert
Glyn, Col. Richard (Dorset, N.)
Kitson, Timothy


Butler, Rt. Hn. R. A. (Saffron Walden)
Goodhew, Victor
Lambton, Viscount


Carr, Compton (Barons Court)
Gower, Raymond
Langford-Holt, J.


Chataway, Christopher
Grant-Ferris, Wg Cdr. R. (Nantwich)
Leavey, J. A.


Clark, Henry (Antrim, N.)
Green, Alan
Legge-Bourke, Maj. H.


Clark, William (Nottingham, S.)
Grimond, J.
Legh, Hon. peter (Petersfield)


Cleaver, Leonard
Grimston, Sir Robert
Lewis, Kenneth (Rutland)


Collard, Richard
Hall, John (Wycombe)
Litchfield, Capt. John


Cordeaux, Lt.-Col. J. K.
Hamilton, Michael (Wellingborough)
Longden, Gilbert







Loveys, Walter H.
Powell, J. Enoch
Thomas, Leslie (Canterbury)


Lucas-Tooth, Sir Hugh
Price, H. A. (Lewisham, W.)
Thomas, Peter (Conway)


MacArthur, Ian
Prior, J. M. L.
Thompson, Kenneth (Walton)


McLaren, Martin
Prior-Palmer, Brig. Sir Otho
Thompson, Richard (Croydon, S.)


McLaughlin, Mrs. Patricia
Proudfoot, Wilfred
Thorneycroft, Rt. Hon. Peter


Maclay, Rt. Hon. John
Ramsden, James
Thornton-Kemsley, Sir Colin


McMaster, Stanley R.
Redmayne, Rt. Hon. Martin
Tiley, Arthur (Bradford, W.)


Maginnis, John E.
Rees, Hugh
Turner, Colin


Manningham-Buller, Rt. Hn. Sir R.
Rees-Davies, W. R.
Turton, Rt. Hon. R. H.


Markham, Major Sir Frank
Ridley, Hon. Nicholas
Tweedsmuir, Lady


Marlowe, Anthony
Ridsdale, Julian
van Straubenzee, W. R.


Marten, Neil
Roberts, Sir Peter (Heeley)
Vickers, Miss Joan


Matthews, Gordon (Merlden)
Roots, William
Vosper, Rt. Hon. Dennis


Mawby, Ray
Ropner, Col. Sir Leonard
Wakefield, Edward (Derbyshire, W.)


Montgomery, Fergus
Scott-Hopkins, James
Wakefield, Sir Wavell (St. M'lebone)


Morgan, William
Seymour, Leslie
Wall, Patrick


Nabarro, Gerald
Sharples, Richard
Ward, Dame Irene (Tynemouth)


Neave, Airey
Shaw, M.
Watts, James


Nicholson, Sir Godfrey
Shepherd, William
Wells, John (Maidstone)


Noble, Michael
Simon, Sir Jooelyn
Williams, Dudley (Exeter)


Osborn, John (Hallam)
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Williams, Paul (Sunderland, S.)


Osborne, Cyril (Louth)
Speir, Rupert
Wills, Sir Gerald (Bridgwater)


Page, A. J. (Harrow, West)
Stevens, Geoffrey
Wilson, Geoffrey (Truro)


Page, Graham
Steward, Harold (Stockport, S.)
Wise, A. R.


Partridge, E.
Stodart, J. A.
Wolrige-Gordon, Patrick


Pearson, Frank (Clitheroe)
Stoddart-Scott, Col. Sir Malcolm
Woodhouse, C. M.


Peel, John
Storey, Sir Samuel
Woodnutt, Mark


Percival, Ian
Studholme, Sir Henry
Woollam, John


Peyton, John
Summers, Sir Spencer (Aylesbury)
Worsley, Marcus


Pike, Miss Mervyn
Sumner, Donald (Orpington)



Pilkington, Capt. Richard
Talbot, John E.
TELLERS FOR THE NOES:


Pitman, I. J.
Tapsell, Peter
Mr. Gibson-Watt and Mr. Whitelaw.


Pitt, Miss Edith
Teeling, William



Pott, Percivall
Temple, John M.

The Deputy-Chairman (Major Sir William Anstruther-Gray): I now call the Amendment in the name of the hon. Member for Sheffield, Hillsborough (Mr. Darling) relating to societies registered under the Industrial and Provident Societies Acts—in page 50, line 7.

Mr. Ellis Smith: Are the others not being taken, Sir William?

The Deputy-Chairman: As the hon. Member may have heard, they were all discussed with the first Amendment and there was to be a chance to vote on this Amendment and one subsequent one. I

understand that this Amendment has been chosen to be voted on.

Amendment proposed: In page 50, line 7, at end add:—
Provided that this section shall not have effect in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955.—[Mr. Darling.]

Question put, That those words be there added:—

The Committee divided: Ayes 127, Noes, 199.

Division No. 106.]
AYES
10.52 p.m.


Ainsley, William
Hughes, Cledwyn (Anglesey)
Randall, Harry


Allaun, Frank (Salford, E.)
Hughes, Emrys (S. Ayrshire)
Redhead, E. C


Awbery, Stan
Hughes, Hector (Aberdeen, N.)
Rhodes, H.


Bacon, Miss Alice
Hunter, A. E.
Roberts, Albert (Normanton)


Baxter, William (Stirlingshire, W.)
Hynd, H. (Accrington)
Roberts, Goronwy (Caernarvon)


Benoe, Cyril (Dunbartonshire, E.)
Janner, Barnett
Ross, William


Benson, Sir George
Jay, Rt. Hon. Douglas
Skeffington, Arthur


Blyton, William
Jeger, George
Slater, Mrs. Harriet (Stoke, N.)


Bowden, Herbert W. (Leics, S.W.)
Jenkins, Roy (Stechford)
Slater, Joseph (Sedgefield)


Boyden, James
Jones, Rt. Hn. A. Creech (Wakefield)
Small, William


Broughton, Dr. A. D. D.
Jones Jack (Rotherham)
Smith, Ellis, (Stoke, S.)


Brown, Alan (Tottenham)
Jones, J. Idwal (Wrexham)
Snow, Julian


Brown, Rt. Hon. George (Belper)
Lee, Frederick (Newton)
Soskice, Rt. Hon. Sir Frank


Brown, Thomas (Ince)
Lewis, Arthur (West Ham, N.)
Spriggs, Leslie


Butler, Mrs. Joyce (Wood Green)
Logan, David
Steele, Thomas


Callaghan, James
Loughlin, Charles
Stewart, Michael (Fulham)


Chetwynd, George
Mabon, Dr. J. Dickson
Stonehouse, John


Cliffe, Michael
McCann, John
Stones, William


Corbet, Mrs. Freda
MacColl, James
Strachey, Rt. Hon. John


Craddock, George (Bradford, S.)
McInnes, James
Sylvester, George


Crosland, Anthony
McKay, John (Wallsend)
Symonds, J. B.


Cullen, Mrs. Alice
Mackie, John
Taylor, Bernard (Mansfield)


Davies, G. Elfed (Rhondda, E.)
Mahon, Simon
Thomas, George (Cardiff, W.)


Davies, Ifor (Cower)
Manuel, A. C.
Thomas, Iorwerth (Rhondda, W.)


Deer, George
Marquand, Rt. Hon. H. A.
Thompson, Dr. Alan (Dunfermline)


Dempsey, James
Mason, Roy
Thornton, Ernest


Diamond, John
Mayhew, Christopher
Ungoed-Thomas, Sir Lynn


Dodds, Norman
Mendelson, J. J.
Wainwright, Edwin


Dugdale, Rt. Hon. John
Millan, Bruce
Watkins, Tudor


Edwards, Robert (Bliston)
Mitchison, G. R.
Weitzman, David


Fernyhough, E.
Monslow, Walter
Wheeldon, W. E.


Fitch, Alan
Morris, John
White, Mrs. Eirene


Forman, J. C.
Neal, Harold
Willey, Frederick


Fraser, Thomas (Hamilton)
Noel-Baker, Francis (Swindon)
Williams, D. J. (Neath)


George Lady Megan Lloyd
Noel-Baker. Rt. Hn. Philip (Derby, S.)
Williams, Rev. Ll. (Abertillery)


Ginsburg, David
Oram, A. E.
Williams, W. R. (Openshaw)


Gordon Walker, Rt. Hon. P. C.
Owen, Will
Willis, E. G. (Edinburgh, E.)


Hannan, William
Padley, W. E.
Winter-bottom, R. E.


Hayman, F. H.
Parker, John (Dagenham)
Woof, Robert


Herbison, Miss Margaret
Pavitt, Laurence
Yates, Victor (Ladywood)


Hilton, A. V.
Pearson, Arthur (Pontypridd)
Zilliacus, K.


Holman, Percy
Pentland, Norman
TELLERS FOR THE AYES:


Howell, Charles A.
Probert, Arthur
Mr. A. J. Irvine and Mr. Short.




NOES


Aitken, W. T.
Bidgood, John C.
Brewis, John


Allason, James
Biggs-Davison, John
Bromley-Davenport, Lt.-Col. W. H.


Amory, Rt. Hn. D. Heathcoat (Tiv'tn)
Birch, Rt. Hon. Nigel
Browne, Percy (Torrington)


Ashton, Sir Hubert
Bishop, F. P.
Bullard, Denys


Barber, Anthony
Black, Sir Cyril
Bullus, Wing Commander Eric


Barter, John
Bossom, Clive
Butcher, Sir Herbert


Batsford, Brian
Boure-Arton, A.
Butler, Rt. Hn. R. A. (Saffron Walden)


Baxter, Sir Beverley (Southgate)
Bowen, Roderic (Cardigan)
Carr, Compton (Barons Court)


Bell, Philip (Bolton, E.)
Box, Donald
Chataway, Christopher


Berkeley, Humphry
Boyle, Sir Edward
Clark, Henry (Antrim, N.)




Clark, William (Nottingham, S.)
Johnson, Eric (Blackley)
Roberts, Sir Peter (Heeley)


Cleaver, Leonard
Joseph, Sir Keith
Roots, William


Collard, Richard
Kerans, Cdr. J. S.
Ropner, Col. Sir Leonard


Cordeaux, Lt.-Col. J. K.
Kerby, Capt. Henry
Scott-Hopkins, James


Corfield, F. V.
Kerr, Sir Hamilton
Seymour, Leslie


Costain, A. P.
Kitson, Timothy
Sharples, Richard


Coulson, J. M.
Lambton, Viscount
Shaw, M.


Courtney, Cdr, Anthony
Langford-Holt, J.
Shepherd, William


Critchley, Julian
Leavey, J, A.
Simon, Sir Jocelyn


Curran, Charles
Legge-Bourke, Maj. H.
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Currie, G. B. H.
Legh, Hon. Peter (Petersfield)
Speir, Rupert


d'Avigdor-Goldsmid, Sir Henry
Lewis, Kenneth (Rutland)
Stevens, Geoffrey


Donaldson, Cmdr, C. E. M.
Litchfield, Capt. John
Steward, Harold (Stockport, S.)


Drayson, G. B.
Longden, Gilbert
Stodart, J. A.


du Cann, Edward
Loveys, Waiter H.
Stoddart-Scott, Col. Sir Malcolm


Dalkeith, Earl of
Lucas-Tooth, Sir Hugh
Storey, Sir Samuel


Emery, Peter
MacArthur, Ian
Studholme, sir Henry


Errington, Sir Eric
McLaren, Martin
Summers, Sir Spencer (Aylesbury)


Farey-Jones, F. W.
McLaughlin, Mrs. Patricia
Sumner, Donald (Orpington)


Farr, John
McMatter, Stanley R.
Talbot, John E.


Fell, Anthony
Maginnis, John E.
Tapsell, Peter


Finlay, Graeme
Manningham-Buller, Rt. Hon. Sir R.
Teeling, William


Fisher, Nigel
Markham, Major Sir Frank
Temple, John M.


Forrest, George
Marlowe, Anthony
Thomas, Leslie (Canterbury)


Fraser, Ian (Plymouth, Sutton)
Marten, Nell
Thomas, Peter (Conway)


Freeth, Denzil
Matthews, Gordon (Merldan)
Thompson, Kenneth (Walton)


Gammans, Lady
Mawby, Ray
Thompson, Richard (Croydon S.)


Gardner, Edward
Montgomery, Fergus
Thorneycroft, Rt. Hon. Peter


Gibson-Watt, David
Morgan, William
Thornton-Kemsley, Sir Colin


Glyn, Dr. Alan (Clapham)
Nabarro, Gerald
Thorpe, Jeremy


Glyn, Sir Richard (Dorset, N.)
Neave, Alrey
Tiley, Arthur (Bradford, W.)


Goodhew, Victor
Nicholson, Sir Godfrey
Turner, Colin


Gower, Raymond
Osborn, John (Hallam)
Turton, Rt. Hon. R. H.


Grant-Ferris, Wg Cdr. R. (Nantwich)
Osborne, Cyril (Louth)
Tweedsmuir, Lady


Green, Alan
Page, A. J. (Harrow, West)
van Straubenzee, W. R


Grimond, J.
Page, Graham
Vickers, Miss Joan


Grimston Sir Robert
Partridge, E.
Vosper, Rt. Hon. Dennis


Hall, John (Wycombe)
Pearson, Frank (Clitheroe)
Wakefield, Edward (Derbyshire, W.)


Hamilton, Michael (Wellingborough)
Peel, John
Wakefield, Sir Waved (St. M'lebone)


Heald, Rt. Hon. Sir Lionel
Percival, Ian
Wall, Patrick


Hendry, Forbes
Peyton, John
Ward, Dame Irene (Tynemouth)


Hiley, Joseph
Pike, Miss Mervyn
Watts, James


Hirst, Geoffrey
Pilkington, Capt. Richard
Wells, John (Maidstone)


Hocking, Philip N.
Pitman, I. J.
Whitelaw, William


Holland, Philip
Pitt, Miss Edith
Williams, Dudley (Exeter)


Hollingworth, John
Pott, Percival
Williams, Paul (Sunderland, S.)


Hopkins, Alan
Powell, J. Enoch
Wills, Sir Gerald (Bridgwater)


Hornby, R. P.
Price, H. A. (Lewisham, W.)
Wilson, Geoffrey (Truro)


Hornsby-Smith, Rt. Hon. Patricia
Prior, J. M. L.
Wise, A. R.


Howard, Gerald (Cambridgeshire)
Prior-Palmer, Brig, Sir Otho
Wolrige-Gordon, Patrick


Hughes-Young, Michael
Proudfoot, Wilfred
Woodhouse, C. M.


Hutchison, Michael Clark
Ramsden, James
Woodnutt, Mark


Iremonger, T. L.
Redmayne, Rt. Hon. Martin
Woollam, John


Irvine, Bryant Codman (Rye)
Rees, Hugh
Worsley, Marcus


Jackson, John
Rees-Davies, W. R.



James, David
Ridley, Hon. Nicholas
TELLERS FOR THE NOES:


Jenkins, Robert (Dulwich)
Ridsdale, Julian
Mr. Brooman-White and Mr. Noble.


Johnson, Dr. Donald (Carlisle)

Motion made, and Question proposed, That the Clause stand part of the Bill.

11.0 p.m.

Mr. Crosland: I am sorry at this hour to detain certain hon. Members opposite, but this is the most important Clause in the Bill, and it really must not be allowed to go through without discussion. This is the one major increase in taxation which the Bill proposes. It was discussed by many hon. Members in the Budget debate, and something should be said about it now.

Mr. Grant-Ferris: Speak up.

Mr. Crosland: If the hon. Member, who has not taken part in any of our debates on the Finance Bill, will kindly shut up, we may be able to get on.
The argument against the Clause is that it represents an extremely clumsy way of doing what the Chancellor himself has in mind. According to the right hon. Gentleman's speech on the Budget, the object of this 2½ per cent. increase in the Profits Tax is not to restrain capital investment but, presumably, to restrain the increase in dividends and the increase in capital values. The whole argument against doing it by an undifferentiated increase in Profits Tax is that it will not even fulfil its object.
It will not fulfil its object because, to a considerable extent, the increase in Profits Tax will be met not out of dividends but out of profit retentions. This shows how much more flexible an instrument we should have if we still had what, until a few years ago, we had, namely, a differential Profits Tax which would enable one to touch dividends or profit retentions as one chose.
We on this side do not object to the idea that some restraint on dividends and on the increase in capital values is necessary at this moment. What we very much object to is an increase in a tax which may have the slightest risk of restraining company savings and company investment. It is curious that it should be hon. Members opposite, who do little but make speeches about the importance of savings and the need for more savings, who are nevertheless prepared to support an increase in a tax which is certain to reduce company savings.
It should be agreed on both sides of the Committee that we need in this country today higher savings and higher investment. The Chancellor has recently been lecturing various bodies on what is likely to happen to our balance of payments this year. What is likely to happen is not very cheering. It looks as though we shall have a surplus of £100 million. We shall certainly lend overseas more than that £100 million, the consequence being that our gold reserve will go down.
As the right hon. Gentleman keeps on arguing in his public speeches that we can remedy this position only by increasing our exports, the question which the Committee must face is why, year after year, in the export race we are falling behind almost all the other nations in Europe.
The fact is that our prices are not as competitive as they should be in export markets, and the Chancellor must take a view as to what he will do about this. One thing which has been urged on him recently and which he could logically do, but which the whole Committee would like to avoid, is to devalue the £. This is a last resort which nobody wants to urge upon him. If, however, our prices are not as competitive as they should be and the £ is not to be devalued in terms of other countries, the only

possible hope for the country is to get down its relative costs. The only way to do that is by raising its level of investment.
The figures have been quoted before, but they deserve repetition. The country is investing 14 per cent. of its national income in industrial investment. The countries of the Common Market are investing 17 per cent. and Germany is investing 20 per cent. This kind of ratio has gone on year after year under the Conservative Government. Hon. Members opposite, who talk about the importance of investment and of savings, are, nevertheless, apparently prepared complacently to put up with Government policies which keep our investment performance as low as this.
We shall not stop the gradual slide in our exports, we shall not achieve a rate of economic growth equal to that of the other countries of Europe, unless we can jerk up our level of investment from 14 per cent. to at least 17 per cent. and, preferably, to 20 per cent. This should be the whole object of Government financial policy, instead of which we have an increase in Profits Tax, which, granted that we do not have a differential tax, is the next best thing, or better than nothing. We have an increase in Profits Tax, which, because the instrument is crude, because it cannot differentiate between dividends and profits retentions, will strike to some unknown extent at both company savings and, possibly, company investment. For that reason, it is a crude instrument and the Clause will not properly fulfil the purposes which the Chancellor of the Exchequer has in mind.

Mr. Hirst: For, in part, different reasons from those of the hon. Member for Grimsby (Mr. Crosland), I cannot let the Clause pass without some measure of protest, as will be clear from an Amendment which I had on the Order Paper but which, understandably, according to the normal rules, has not been called.
I do not run parallel with the hon. Member for Grimsby in the first part of my argument, but I do in the second. In the first part, I consider the tax in any event a bad one. To increase it is even worse. The burden falls selectively on limited companies and it is a retrograde step to increase it by 25 per cent.,


as the Chancellor has done. I can find no excuse for that. It will not save the £ or do anything else. It is a completely unnecessary action and is a retrograde step, against which I protest strongly.
I fall right into line with the hon. Member for Grimsby inasmuch as, although possibly for different reasons, this tax acts as a disincentive to investment in industry. We have been short of investment in industry and this is a discouraging move. The fiscal reasons which seem to have activated my right hon. Friend the Chancellor of the Exchequer are nothing like as important as the disincentive which this higher tax is likely to be towards investment, which must be geared up considerably if we are to take our place alongside other nations to build up our exports to the extent which my right hon. Friend and the nation want.
I cannot understand my right hon. Friend's mind. In fact, I cannot understand him very much in this year's Budget or Finance Bill. I am glad, however, that he has been able to listen to this debate, which he was not able to do on Clause 59.

Sir E. Boyle: After listening to the last two speeches, I am not sure of the extent to which the hon. Member for Grimsby (Mr. Crosland) and my hon. Friend the Member for Shipley (Mr. Hirst) are in complete agreement. I will, however, make a few brief points on the Clause. As is well known to the Committee, the object of my right hon. Friend the Chancellor of the Exchequer in raising the Profits Tax was primarily to fortify the revenue for the years ahead. Inevitably, Profits Tax does not bring in revenue in the first year, but at a time when my right hon. Friend felt that some moderate restraint of demand was necessary, it seemed not unreasonable to make company profits bear some of the restraint that was needed. I am bound to say that my right hon. Friend believed that the higher rate would have at any rate some marginal effect on dividend distribution and on share values at the present time when we have had two years of price stability and when nothing is more important than maintaining that stability That was a further reason that seemed a good argument for putting up the Profits Tax this year.
11.15 p.m.
The hon. Member for Grimsby (Mr. Crosland) returned tonight, quite rightly, to a subject on which he spoke during the Budget debate, namely, the importance of Britain's improving her effort in investment during the course of this Parliament. It always seems to me that, when one is considering the relation between Profits Tax and investment, it is important to distinguish, as I am sure the hon. Member would wish to do, between companies having sufficient wherewithal for increased investment and having sufficient incentive for increased investment.
I did not think the hon. Member altogether convincing about the wherewithal for increased investment, because the first four months of this year—not just April, although the figures for April were strikingly high—showed an average increase in industrial profits of 13 per cent., and an average increase in dividends of 26 per cent., while company saving for the period increased by 21 per cent. I find it difficult to believe that companies will not have the wherewithal to increase investment by about the percentage, namely, 10 per cent., which is expected during the year 1960–61.
Indeed, I think that one can lay stress on exactly the opposite point—and here I refer to something I said in the Budget debate. If companies get too liquid, it obviously gets more difficult for monetary policy to operate. I do not want to set out this argument in detail now, but obviously at a time when we are relying on a combination of monetary and fiscal measures, there is a danger in companies becoming too liquid.
An expansionist policy, nonetheless held within bounds, will give companies an incentive to investment if they feel that they will see several years of steady expansion. It is against that background that we are most likely to see improvements in Britain's investment performance. All told, there is no doubt that my right hon. Friend had to do something else this year beyond increasing the Tobacco Duty, and company profits at their present level can reasonably be expected to bear the extra imposte of 2½ per cent. which my right hon. Friend has made.

Mr. Jay: I suppose that this is the most important proposal of the Budget. On this side of the Committee, we are


at least glad to have it recognised by the Chancellor of the Exchequer and the party opposite that a rise in the Profits Tax is a legitimate method of restraining demand in the economy. I remember that when we made a similar increase in the Labour Government in 1949, of 5 per cent. in the distributed rate of Profits Tax, hon. Members opposite opposed it as an entirely improper way of trying to restrain excessive demand. Now we see that there has been, at any rate, some conversion on this important matter.
However, let no one think that the increase which the Chancellor of the Exchequer has made is of any substance. This is an increase of only 2½ per cent., and it is now true that the total direct taxation on company profits, Income Tax and Profits Tax together, is 51¼ per cent. As the United States has had a corporation profits tax of 52 per cent. for many years, the burden cannot be thought to be that excessively heavy. Indeed, it is remarkable how the two countries seem to reach almost exactly the same results by different routes.
Nevertheless, it is extraordinary to see what the Chancellor has now been induced to do and the present form in which he has got Profits Tax. Let us consider the right hon. Gentleman's own reasons for making this change. On Second Reading he said that he was satisfied that in present circumstances
… this increase will not … interfere with the current upward trend in industrial investment, but would have some limited effect on consumer spending."—[OFFICIAL REPORT, 3rd May, 1960; Vol. 622, c. 904.]
Therefore, his whole purpose was to restrain consumer spending without restraining investment. But it is quite clear that had he retained the differential rates of Profits Tax and been in a position to put a higher rate on dividend-paying profits, he must have been in a better position to produce the very effects which he himself has said he desires than by the arrangements which he has now made. Indeed, if we take what the Chancellor has done, together with the words which he used in defending it on the Second Reading of the Bill, it is quite clear that he has put himself in a less advantageous position by abolishing the differential rate a year ago.
If he had raised the distributed rate, as was done in 1949, there would have been relatively more incentive for companies to have retained profits and less incentive for them to pay them away in dividends. Secondly, it is quite clear from the whole of this discussion we have had about local authorities and co-operative societies that in that respect, also, the Chancellor now has a much less flexible instrument in his hands. Under the policy effected by my noble Friend, Lord Dalton, in 1947, the nonprofit making bodies such as local authorities and building societies paid only the retained rate of profits tax. It was possible for the Chancellor to raise taxation on the ordinary limited companies and not to raise it at the same time on the co-operative societies and the building societies.
The Chancellor has deprived himself of that flexibility, and one effect on the building societies of the rise in the general Profits Tax has been that the societies have been forced to raise their lending rates—Which they have done since the Budget was introduced—by a greater margin than they have raised their borrowing rates. So, because of this abolition of the differential rates of Profits Tax, the Chancellor has actually forced the building societies to charge an even higher rate of interest to those who are buying houses on mortgage. Is that what he intended? Whether it was intended or not, he has been forced to do it as a result of the clumsiness of the instrument in his hands. It shows how wrong he was to lump everything together in this way and how right we were two years ago when we suggested that there should be a lower rate of tax, where that was the proper instrument to apply, without having, as we now have, to impose it clumsily on everything at once. I hope that he will take that into account when he comes to consider this matter again.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 62 to 68 ordered to stand part of the Bill.

Orders of the Day — Clause 60.—(VALUATION OF ASSETS OF CERTAIN COMPANIES.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Crosland: We certainly should not allow this Clause to go past without some explanation. I want to ask one or two questions. On Second Reading the Chancellor of the Exchequer simply said that this concession was one which had been strongly urged on him and which would be welcomed. By whom will it be welcomed? The Press comments on the Clause certainly did not

suggest a welcome. For example, on 9th April, the Economist called this clause
a most surprising feature of the technical side of the Budget which will delight owners of private companies.
Why has this surprising feature been put into the Bill? On 10th May, in discussing the Clause, the Financial Times said,
In certain cases this could mean a very big difference in the valuation.… Toughness on the taxpayer is thus combined with alleviation for the estates of deceased persons. There must be a political moral there somewhere, if one could only find it.


It would be interesting if the Financial Secretary told us precisely what is the political moral. In view of our debates on the Question that Clause 59 stand part of the Bill, there seems to be a general willingness on the Chancellor's part to make substantial concessions on the one lax—Estate Duty—which, unlike other taxes, does not fall on effort, on ability or on anybody's contribution to the common good. It is simply a matter of class according to the kind of parents to whom children are born. We need an explanation of the Clause which, judged by comments on it, may represent substantial concessions in terms of Estate Duty.

Sir E. Boyle: This Clause proposes quite a small change to the advantage of the taxpayer in what is known as the assets basis, that is to say, the method of valuation of controlling interests in one-man companies for Estate Duty purposes under Section 55 of the Finance Act, 1940. Briefly, the Clause abolishes "break-up" valuations for ordinary trading companies and provides that they shall always be valued on a going-concern basis.
The hon. Member for Grimsby (Mr. Crosland) asked who would be pleased by the Clause. I think certainly the directors and in some cases, perhaps, shareholders in private companies will be pleased. He asked why we should make concessions here for people who have done nothing to better themselves and their own position through hard effort in life. It is worth remembering that investment and property dealing companies are explicitly excluded from the new provisions of the Clause.
I think, also, that one must not in any way exaggerate the effect that this Clause will have. In the vast majority of trading company cases valuations are on a going-concern basis now and there will not be any great difference felt under the new legislation. This effect will be mainly felt in the comparatively rare cases in trading companies where a break-up valuation has been appropriate in the past. It will give some benefit to unprofitable businesses struggling to keep going, or profitable business with an asset which may usefully be used in some other direction. This is a pioneer Clause with a fairly limited scope, but within that scope I think it will prove valuable, and I can-

not feel that it has the rather sinister aspect suggested by the hon. Member for Grimsby.

Mr. H. Wilson: We do not wish to delay the acceptance of this Clause, but perhaps the Financial Secretary would indicate what loss there will be to the Revenue as a result. So far as we can see, it seems an unexceptionable proposal, but particularly to allay the suspicions of my hon. Friend, perhaps the hon. Gentleman would say what in a normal year would be the loss.

Sir E. Boyle: This is the sort of Clause where it is difficult to make a firm estimate, but it is unlikely that the average would be as much as £250,000 in a full year.

Question put and agreed to

Clause ordered to stand part of the Bill

Orders of the Day — Clause 69.—(RELIEF FROM PURCHASE TAX ON ARTICLES INTENDED FOR GALLERIES, MUSEUMS, ETC.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mrs. Eirene White: I am sorry, in a brief reference to this very modest gesture to learning and the arts. to appeal to the aesthetic sense of the Committee and to delay the bugle solo from Kidderminster which is to follow, but we should have, I think, some explanation of this small and interesting Clause which exempts from Purchase Tax objects to be exhibited in museums, galleries, and similar institutions.
The Chancellor will be aware that last year my hon. Friends and I moved a very much more substantial remission of taxation as it affected galleries and museums, and I should like to explain why, this year, in spite of certain indications to the contrary on the Order Paper, we do not intend to press that point. This is only a.reculer pour mieux sauter, and we shall certainly return to the charge on another occasion. But we would like a little further explanation of the scope of the Clause.
It does not cover equipment or furniture, and therefore it must be very limited. It is a very small gesture towards culture. I would like to know how limited its conditions are. The Clause suggests that the Commissioners can make certain conditions for the protection of the Revenue. What sort of conditions are envisaged? Later in the Clause there is a safeguard against remitting tax on any article which may subsequently be sold, so it cannot be that; there must be some other conditions.
I am a Governor of the National Museum of Wales, and we have a very admirable service of loans to schools, educational settlements and other institutions, and they are net likely to be included in a list approved by the Treasury for this purpose. As an administrative matter I should like to be entirely satisfied that if something is obtained free of tax under the provisions of the Clause we shall not get into difficulties if, for some reason, a gallery wishes to include such an object in its loan collection. I have no doubt that all these practical matters have been thoroughly thought out by the Treasury, but this is a useful, if limited, provision, and the Committee is entitled to know a little more about it before passing to the next Clause.

Mr. J. Grimond: I welcome the Clause as a very

civilised gesture on the part of the Treasury, but I am not certain how wide its provisions will be. I do not know whether the Treasury can give us an idea of the type of articles to which it envisages they might apply. Secondly, I take it that the article in question need not be directly acquired by the gallery or museum. Somebody may buy or import an article with the intention of presenting it to a gallery, and in appropriate circumstances might be excused Purchase Tax or the equivalent.
The Clause refers to
a gallery, museum or similar institution, being an institution approved by the Treasury …
I do not know whether there are any precedents for this. If the Minister can give us some indication of the type of institutions which are likely to be approved by the Treasury it will be very helpful. Houses owned by the National Trust would presumably fall within the terms of the Clause, but would private houses opened to the public? I am not sure.
Extremely wide powers are given to the Treasury by this and the following Clause, and I should welcome an indication by the Minister of the way in which they are to be exercised.

Mr. Barber: The purpose of the Clause is to empower the Commissioners of Customs and Excise to remit Purchase Tax on articles acquired by museums, galleries and similar institutions approved by the Treasury, where the articles are to be used as exhibits or specimens. The Clause will regularise an extra-statutory concession which now exists in regard to imported goods. That concession is parallel with the relief from Import Duty which results from the Import Duties Act, 1958. Home-produced goods are not at present relieved from Purchase Tax, but if they are acquired by museums it is logical and desirable that they should be treated in the same way.
The hon. Member for Orkney and Shetland (Mr. Grimond) asked if we could give him an example of the sort of institution we had in mind. One instance that comes immediately to mind, because it is directly concerned with the problem with which we have been faced under the extra-statutory concession, is the Institute of Recorded Sound, the main function of which, as the hon.
Member no doubt realises, is to maintain a kind of national archive of gramophone records and tape recordings. Foreign records can be acquired at present free of Import Duty under the Import Duties Act, 1958, and also free of Purchase Tax under the extra-statutory concession. That will now be put on a proper legal basis. In addition, the Institute of Recorded Sound will now be able to receive free of Purchase Tax gramophone records produced in this country.
The hon. Gentleman asked about gifts which had been made. I understand that in this case also the words in the Clause are sufficiently wide to cover a case where a gift is made to any of the approved institutions.
The hon. Lady asked what was meant by the opening words of the Clause—
Subject to such conditions as they"—
that is, the Commissioners of Customs and Excise—
may impose …
She pointed out that at the end of the Clause there is reference to the fact that the Commissioners must be satisfied
… that the article is not intended for subsequent resale.
The sort of condition which immediately comes to mind is that the Commissioners, besides being merely satisfied that the article is not intended for resale, may require an undertaking from the institution that it will not sell the article, or that if it is going to sell the article it will inform the Commissioners of Customs and Excise, so that under whatever provisions the Commissioners may decide, Purchase Tax would at a later stage be payable.
As to the safeguards generally, I should point out that the institution must be approved by the Treasury, and this is a matter for the discretion of the Treasury. I realise the point that the hon. Lady made as to what sort of institutions will be involved. I have given her one example and I am sure that my right hon. Friend would be happy to consider any representations which may be made to him so that he could exercise his discretion in the way that he thinks best.
The second safeguard of which I would remind the Committee is that the

Customs must be satisfied that the article is intended for use
as an exhibit or specimen in a gallery, museum or similar institution
but a considerable amount of discretion is given to the Treasury in this matter, and I do not think it would be helpful at this stage, even if it were possible, to give any further indication of the sort of galleries, museums or similar institutions which may benefit from this Clause, beyond saying that I have no doubt that my right hon. Friend will take into account any representation.

Mrs. White: Could we have an assurance about this matter of loans, which is quite important? For instance, the Institute of Recorded Sound may wish to lend gramophone records or even hire them out. I know from a cognate experience of the British Film Institute that films are hired out in certain circumstances to film societies. Would that be covered?

Mr. Barber: I had not considered this point. I should not have thought so, judging from the words in the Clause, which are
used as an exhibit or specimen in a gallery, museum or similar institution …
I should not have thought it would cover another institution to which they were lent. This is obviously an important point and perhaps I may consider it.

Mr. W. F. Deedes: There is a point which was raised by the hon. Member for Orkney and Shetland (Mr. Grimond) which I do not think my hon. Friend answered, namely, in respect of historic houses—that is, houses in receipt of a grant from the Ministry of Works and the Treasury, which in effect have to be open to the public and become very much in the category of a "museum or similar institution" Would these provisions apply to houses under the Historic Buildings Council?

Mr. Barber: I doubt whether they would be considered to be similar institutions to a gallery or a museum, but I will look into that.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 70 ordered to stand part of the Bill.

11.30p.m.

Orders of the Day — Clause 71.—(PREMIUM SAVINGS BONDS.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Crosland: I am sorry that these Clauses of the Bill are receiving such little examination from hon. Members opposite—so far, at any rate—although judging from the Economic Secretary's reply on a previous Clause, a closer examination would not have achieved very much if it had been made. I should like to ask one or two questions on the Clause.
I should like to reply to a speech made on Second Reading by the right hon. Member for Flint, West (Mr.Birch), which seemed to me an extremely powerful plea, which was not then answered and which should be answered now. The right hon. Gentleman pointed out that the whole system of concessions on National Savings has got almost completely out of control. The object of these concessions in the first place was to attract small savings for people of modest means on the assumption that unless they were made the savings would not occur. At present levels of taxation, however, the main attraction of National Savings today is not for the small saver but for the Surtax payer.
The right hon. Member for Flint, West, on Second Reading, gave a number of fantastic examples of what the grossed-up yield of certain kinds of National Savings were after the concessions which the Chancellor has made in this and other Clauses. Certainly judging by Press reactions to this Clause and various other concessions, it is clear that the main effect of these additional concessions is to aid the Surtax payer. For example, the Investors Chronicle, commenting on this point, and on concessions generally to National Savings, said:
As usual, these concessions are, because of the tax angle, very appealing to the Surtax payer, and those in the higher tax bracket will no doubt take full advantage of them.
Two questions arise. I should like them answered, but preferably not by the Economic Secretary, who has not once given any information in replying to any Clause on the Bill. I ask the Chancellor to answer these two questions. Does he or does he not agree

that these additional concessions on National Savings are now going to the wrong people—that is to say, not to the small saver but to the Surtax payer? Secondly, it is highly probable, as the right hon. Member for Flint, West said, that these savings are not attracting significant amounts of new net savings; all they are leading to is a transfer on the part of the Surtax payer from one kind of saving to another, doing the country very little good. I agree with the right hon. Member for Flint, West on this point, although on practically nothing else—that we are getting to the point where we are paying an excessive amount of Government money for very little result indeed in terms of National Savings.

Mr. Edward du Cann: I do not wish seriously to interrupt the excellent progress which the Committee is making on the Bill, nor shall I make a long speech in answer to the, I think, unnecessary jibes of the hon. Member for Grimsby (Mr. Crosland), but I want to refer briefly to the rates of interest which are being paid on the Premium Bond scheme and to repeat a point which I made in my maiden speech on the Budget four years ago.
When my right hon. Friend the Prime Minister, then Chancellor, introduced this scheme the rate of interest which was being paid on the total amount of money subscribed by purchasers to these bonds to provide the total amount of the prize fund was 47¼ per cent., tax-free. This rate of interest has now been increased to 4½ per cent., tax-free. I should like to ask my right hon. Friend with some diffidence—I am sure that he has studied the matter—whether he feels it necessary to pay out quite so much money by way of prize fund. I do not doubt that he has taken account of the reduction in taxation, the standard rate having gone down from 8s. 6d. to 7s. 9d., but there is a body of opinion—and here I agree with the hon. Member for Grimsby—which feels that perhaps too much money is being paid by the Government from National Savings. Some comparisons may well be relevant. The yield on ordinary shares at the moment, according to the Financial TimesOrdinary Shares Index, is £4 4s. per cent. That is, of course, gross. The return on War Loan is £5 12s. 6d. We can talk of


other forms of investment and can give a long catalogue.
On the Post Office Savings Bank, ignoring tax concessions, the return is a mere 2½ per cent. We have heard figures in the past concerning Premium Bonds, but 4½ per cent. grossed up at the rate of 7s. 9d. in the £ gives a return of 7·3 per cent. This is substantially above the rates. If we take 4½ per cent. grossed tip at the rate of 17s. 9d. in the £ that gives a return of 40 per cent.
It is perhaps fair to take these averages rather than to take the extreme averages stated in such publications as the Investors' Chronicle which suggest that a tax-free prize of £5,000 on an £800 investment is equal to 625 per cent. tax free. If grossed up the return is 1,020 per cent. for the 7s. 9d. in the £ taxpayer and 5,500 per cent. to the 17s. 9d. taxpayer. It is quite clear that this high rate might well affect the rates which others have to pay for savings—for example, the co-operative societies, building societies and others.
The Committee may well feel that this is a subject which requires attention at this time even though the hour is very late. There is a body of opinion which feels that the Government pay very heavily for the amount of money that they gather in by way of National Savings. Let me make it quite clear at once that I am a most strong supporter of the Savings Movement. I always have been, and I hold office in certain National Savings associations and institutions. I have always been a supporter of the Premium Bond scheme. I think it remarkable that in three years some 12 million people have been encouraged to hold these bonds. They amount to some £250 million outstanding and about £20 million has been paid out in prizes.
I wonder—and I hope that my right hon. Friend will say whether he agrees or not—if we could not, perhaps, raise the same amount of money, or may be a little less, and pay less dearly for it.

Mr. Amory: I will, if I may, reply very briefly to the questions that have been put to me. I will not attempt to answer on this occasion the whole of the interesting speech of my right hon. Friend the Member for Flint, West (Mr. Birch), to which I listened with great care. in general, I would say that the

figures which he quoted were correct. It is true that if we attempt to analyse them in the case of Surtax, the return on them, allowing for tax, is very high indeed. That in itself does not necessarily mean that it is an extravagant way from the Government's point of view of attracting those savings. In other words, it may be a very good yield to the Surtax payer, but at the same time it may not necessarily be a very expensive way of the Government borrowing.
Our information does not enable us to say with any degree of accuracy what proportion of new savings comes from the different income groups, but the information that we have enables me to say in reply to the hon. Member for Grimsby (Mr. Crosland) that we are certainly satisfied that a considerable proportion of the net increase in savings comes from people in relatively low income brackets. It is perfectly true that a proportion comes from very wealthy persons indeed, and from their point of view it gives them a high return. It is difficult to single out that particular category. We have not been able to think of any scheme which would enable us to do that.
One has to look at these National Savings fairly broadly and consider the average effect. Certainly from the average point of view we do not feel that we are paying an excessively high price, or an undesirably high price, for the savings that we are getting. I think that that is about the best answer that I can give my hon. Friend. We watch these things carefully, and, of course, the results of National Savings have been good over the last year or two right across the board. Certainly the savings in Trustee Savings Banks and Post Office Savings Banks are in the main those of small savers.
I think that a good many of the Premium Bonds are held by people in fairly low income brackets. I am bound to admit that I have not as full information about that as I should like, but we are watching the situation to see whether we can gradually gain more information and so add to our experience. It may be that in the future we may find that some of these forms of saving should be altered for the better, and if so, we shall endeavour to do that. Before I made the changes which I have


recommended this year I considered all these points and got as much information as I could. The broad conclusion I came to was that the rates and limits we are proposing this year are not extravagant from the point of view of the Government.

Mr. H. Wilson: Despite the lateness of the hour, I think I speak for all hon. Members on this side of the Committee and, perhaps, some hon. Members opposite when I say that the Chancellor's reply was perfunctory in the extreme. I do not say that we should debate this Clause at the length that we debated the subject when Premium Bonds were introduced by the Prime Minister when he was Chancellor of the Exchequer four years ago. On that occasion we debated the matter from the beginning of business until 7.30 or 8 o'clock in the evening. I do not say that that would be appropriate on this occasion, but the Chancellor has not begun to answer the points raised by my hon. Friend the Member for Grimsby (Ms. Crosland) and the hon. Member for Taunton (Mr. du Cann.)
It is quite clear that the figures achieved by Premium Bonds are related to these excessive rates of interest and the Chancellor made no comment at all on the figures quoted by the hon. Member for Taunton. I am sure they are accurate and they have been widely quoted in different newspapers. They are something like 7½ per cent. for the investor, if that is the right word, who is on the standard rate of Income Tax and up to 40 per cent. for those on the top rate of Surtax. These are very high rates of interest. Earlier today my hon. Friend the Member for Sowerby (Mr. Houghton) was complaining about the charges levied by the Board of Inland Revenue in respect of interest on sums that are outstanding, and he said that 3 per cent. was pretty low. Here we have the Chancellor paying a much higher figure than that on the Premium Bond Scheme.
I do not think it necessary to go into the rather more extreme figures referred to by the hon. Member for Taunton, because they assume a certain degree of success or luck in the winning of prizes. But the figures he quoted and the figures more widely quoted in the Press are

based on an average chance on a calculation of the total prize fund. We can assume, and we are told, that "Ernie" works fairly, and I have no reason to doubt that he does. That represents an average rate of interest to the average investor even though a lot of investors in the scheme do not manage to get an average in terms of getting a prize every three or four years.
When the scheme started we were told that the Surtax payer who went to the limit in investment in Premium Bonds had a one-in-four chance of getting a prize. I think the odds have lengthened since that time for reasons we all know. But whatever the average odds may be, if the money is kept in long enough it still represents a figure of from 7½ per cent. up to 40 per cent according to the rate of tax paid.
The Chancellor said that he could not give any estimate of the proportion of Premium Bonds held by investors in the different brackets regarding the payment of tax. I do not know whether the right hon. Gentleman recalls that early in the scheme I put a Question to the then Chancellor. Obviously he could not give the number of the Surtax payers and my Question related to the number of people who bought Premium Bonds up to the limit at one go. I think that they were identified by a special code number or a grouping of letters—"ZZ"—which indicated that they were bought in blocks of 500. At that time we were told that 40 per cent. of all Premium Bonds bore those letters.
11.45 p.m.
Obviously anyone who had £500 to invest in Premium Bonds all in one block could be assumed to be either someone who had been very thrifty in the past or more likely someone who was in the Surtax bracket. We should like to know whether the figure of 40 per cent. still applies. Perhaps it has fallen a little. Perhaps the scheme has become more generalised. If anything like that figure still applies, the point made by my hon. Friend the Member for Grimsby is fully justified and confirmed.
The hon. Member for Taunton was right. If the Chancellor of the Exchequer extended this kind of interest rate to other forms of saving, he would probably have got in total at least as much as he has got from Premium Bonds plus the


other forms of saving. After all, the right hon. Gentleman is very mean about the Post Office Savings Bank. Although the 2½ per cent. interest on Post Office savings enjoys a £15 exemption, it is only an exemption from the standard rate of Income Tax and it is grossed up for Surtax. A very different rate of interest is obtained in the Post Office Savings Bank scheme from the high figures quoted by the hon. Member for Taunton.
I am not sure that the right hon. Gentleman could not have increased the flow of National Savings, if National Savings are a flow and not a transfer of already saved amounts, if he had been a little more generous with certain other forms of saving and a little less generous with Premium Bonds. If it is the prospect of a prize in a lottery which causes many people to invest in Premium Savings Bonds, the right hon. Gentleman would have attracted just as much money at a more reasonable rate of interest and one far less costly to the taxpayer.
In addition to the interest, one must remember the very high cost of administration of the scheme. No branch of National Savings is advertised so lavishly as the Premium Savings Bond scheme. These costs, added to the interest rate, must take us up to a very high figure. It is, therefore, an extremely expensive form of savings, and the right hon. Gentleman should by this time have considered whether he could cheapen it. I do not know how much is spent on advertising. The right hon. Gentleman should have told us that tonight. I see that my hon. Friend the Member for Kilmarnock (Mr. Ross) is here. He has always taken a great interest in the movements of the Dagenham Girl Pipers in connection with the Premium Savings Bond scheme.
Is it a fact that this scheme is now languishing, and that the right hon. Gentleman feels that it must be given some kind of boost, some kind of shot in the arm? All along some of us have suspected that the scheme, introduced with a flourish of trumpets, or at any rate bagpipes, by the Prime Minister on 1st November, 1956, when he ought to have been concerned with the effects of Suez on our economic situation, has had to be boosted at an excessive cost to the tax-

payer for the sake of saving the face of the Prime Minister. I do not suggest that the face of the Prime Minister is as expensive as the face of the Minister of Aviation, whose activities we debated recently.
The total cost of this scheme must have been enormous. Someone said that £20 million had been paid out in interest. There is the cost of advertising on top of that. Then there is the cost of "Ernie" and the cost of administration. This has been an extremely expensive operation.
I have one last question to put to the Chancellor of the Exchequer. Is it not a fact, to judge from the weekly returns of savings, that while a few months ago the right hon. Gentleman was saying how well savings had gone in the last few years —

Mr. W. R. Rees-Davies: Does the right hon. Gentleman appreciate that he has lost the interest of the entire Committee? If he can be nothing but merely repetitive, he might as well resume his seat.

Mr. Wilson: In these circumstances, I am quite prepared, Sir Gordon, to move that you report Progress and ask leave to sit again, and leave our discussion of this Bill to go on after the Whitsun Recess. It is certainly by no desire of this side of the Committee—

Mr. Nabarro: On a point of order, Sir Gordon. Is it in order for the right hon. Gentleman to threaten to move that you report Progress and ask leave to sit again when he is supported by only 19 of his hon. Friends out of 257?

The Chairman: The right hon. Gentleman is perfectly in order.

Mr. E. Fernyhough: On a point of order, Sir Gordon. I think it would help the Committee if you were to say whether or not it would be in order for my right hon. Friend to move that you report Progress and ask leave to sit again.

The Chairman: It would be in order for the right hon. Gentleman so to move.

Mr. Wilson: Because we are all concerned about the difficulties of the Chancellor and the Patronage Secretary, Sir Gordon, we have refrained from the usual tactic during a Finance Bill of


moving to report Progress more often than we have done. I do not think that it has been moved frivolously at any time during our discussion of this Bill, and the only time that it has been moved from this side at all it has been accepted by the Chancellor of the Exchequer.
When, however, the hon. Member for the Isle of Thanet (Mr. Rees-Davies) has the impertinence to suggest during the discussion of this very important Clause that the manners of his own hon. Friends are such as to suggest that I have lost their interest and that, therefore, I should sit down and let the Clause go through, he is acting in a manner completely unworthy of the House of Commons in relation to a Finance Bill. Earlier, we heard a lot from some hon. Gentlemen opposite, including the hon. Gentleman himself, about the control of Government expenditure. It is, therefore, about time that more hon. Gentlemen opposite faced up to the—

Mr. Nabarro: The right hon. Gentleman will hear a lot more about it tonight as well.

Mr. Wilson: If the suggestion is that we on this side should forgo our rights in order to have the pleasure of hearing still more from the hon. Member for Kidderminster (Mr. Nabarro), he is really asking a lot of us. For five days in this Committee we on this side have sat back listening to hon. Members opposite—

Mr. Anthony Fell: This is all out of order.

Mr. Wilson: It is not for me, Sir Gordon, to comment on whether or not that interruption was a reflection on the Chair, but I would say that if the hon. Member who interrupted me a few moments ago was in order, my reply to him is in order.
As I was saying, we on this side have for five days deferred many of our comments, compressed others, and shown very great restraint—more so than I remember any Opposition doing on the Finance Bill since the war. We have done so because I think the whole House was bored with the Finance Bill and wanted to get it through its Committee stage fairly quickly—

Viscount Hinchingbrooke: The right hon. Gentleman agreed with most of it.

Mr. Wilson: It is not true that we agreed with most of it, and still less did we agree with the concessions made by the Chancellor to please his hon. Friends—

The Chairman: Order. We are dealing with the Question, "That the Clause stand part of the Bill"

Mr. Wilson: I was dealing with that, Sir Gordon, when I was interrupted by the hon. Member, but if there is to be difficulty in making these points perhaps you will consider later that I might move that you report Progress and ask leave to sit again. But I will confine myself to the one point in reply to the hon. Member for the Isle of Thanet by saying that for a whole day we listened to hon. Gentlemen opposite moving Amendments to make the tax dodger's life easier. He must not, therefore, object if for a few minutes we address ourselves to this important Clause which imposes additional charges on the taxpayers—a point that the hon. Gentleman and others do not seem to have taken. Perhaps I can now put my point to the Chancellor, who can then answer, and we can pass on to another Clause.
The question I put to the right hon. Gentleman is this. He told us, quite rightly, that National Savings had been running at a fairly high level during the past few years, but is it not a fact, as I would judge from, perhaps, a rather cursory reading of the weekly returns of National Savings, that in this present financial year, the one starting last April, National Savings from both Premium Bonds and other sources have fallen very considerably indeed compared with the same period last year? Will he tell us whether that is so, and if it is, why, in his view, this is occurring, particularly in Premium Savings Bonds, the subject of the Clause?

Mr. Amory: I think there have been eight weeks of this financial year so far. Last year, during those eight weeks, savings were running at an exceptionally high level both in comparison with other weeks shortly before and, of course, in comparison with the previous year. This year, they are still running at good levels, but in total they are quite substantially down on last year. There have been good weeks and bad weeks
During the past week, even though the total is £4½ million down on the previous week, I think that the results compare very well with the comparable week of last when there was a minus quantity before the Whitsun holiday.
Premium Bonds sales have been down this year compared with last year but up considerably compared with before the Budget. The average net weekly sales of Premium Bonds during the first 13 weeks of this calendar year, that is to say, before the Budget, were £386,000, and the average net weekly sales since the Budget have been £764,000. The latest weekly figure was £880,000. I think that the trend is all right, but the weeks vary considerably one from another. Substantially, the answer is that they are not running at as good a level, taken in total, as they were during the exceptionally favourable period at this time last year.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Orders of the Day — Clause 72.—(EXCHEQUER ADVANCES TO NATIONALISED INDUSTRIES AND UNDERTAKINGS.)

Mr. Nabarro: I beg to move, in page 60, line 43, to leave out "fifty" and to insert "seven"

The Chairman: I think it would be convenient if with this Amendment were discussed the other Amendments in the name of the hon. Member for Kidderminster (Mr. Nabarro) and his hon. Friends.

Mr. Nabarro: This is the master Amendment, and the ten Amendments which follow are as to three of them, consequential and, as to seven of them, Amendments dealing respectively with each of the seven nationalised industries which are covered by this particular method of Exchequer financing. Those seven nationalised industries were first named in the Finance Act, 1956, and they are the Electricity Council, the North of Scotland Hydro-Electric Board, the South of Scotland Electricity Board, the Gas Council, British Overseas Airways Corporation, British European Airways and the British Transport Commission.
The purpose of this Amendment is to substitute £2,007 million for £2,050

million, a net reduction of £43 million in the aggregation of sums to be voted for these seven nationalised industries in respect of their capital investment programmes for the year ending 31st August, 1961.
Sir Gordon, I can hardly hear myself speak for the noise being made by the right hon. Member far Huyton (Mr. H. Wilson) in his conversation with you. I was not sure whether he is addressing the Committee or I am.

12 m.

Mr. Crosland: On a point of order. As the hon. Member for Kidderminster (Mr. Nabarro) has totally lost the attention of the Committee, will he now finish his speech and kindly resume his seat?

Mr. Nabarro: I am sorry to have awoken the hon. Member for Grimsby (Mr. Crosland) by speaking a little louder than my normal tone, but now that he is wide awake again no doubt he will be able to follow my argument.
These are very large sums of money. The Committee should consider how the figure of £2,050 million—

Mr. Mitchison: On a point of order, Sir Gordon. Would it be possible for even the hon. Member for Kidderminster (Mr. Nabarro) to observe ordinary courtesy towards the Chair and his fellow Members?

Mr. Nabarro: Are you responding to that point of order, Sir Gordon?

Mr. Rees-Davies: On a point of order. Is it in order for the right hon. Member for Huyton (Mr. H. Wilson), having lost the entire audience of the Committee, to come to the Chair and engage in a long and loud conversation with the occupant of the Chair?

The Chairman: That is quite out of order.

Mr. Nabarro: If I might now continue my speech, I was saying that the figures involved in this method of financing the seven nationalised industries to which I alluded are very large indeed. The proposition of my right hon. Friend the Chancellor of the Exchequer in the Clause is that for the year to 31st August, 1961, the aggregate shall be run up to £2,050 million.
The Finance Act, 1956, Section 42, authorised a borrowing limit of £700 millions in respect of a period of two years, ending in 1958.
In Section 36 of the Finance Act, 1958, we increased the figure from £700 million to £1,070 million. In the Finance Act, 1959, Section 36, we increased that figure to £1,620 million. This year, the Chancellor proposes to raise it from £1,620 million to £2,050 million, an increase of £430 million.
The first of the Amendments—[Interruption.] The hon. Member for Grimsby has repeated, Sir Gordon, that I have lost the attention of the Committee. On the contrary, the Tory benches are packed. All around me are Tory Members, while over there—

Mr. Mitchison: Who has packed the Tory benches?

Mr. Nabarro: I have packed them, of course.

The Chairman: It would be more helpful if the hon. Member spoke about his Amendment.

Mr. Nabarro: I am coming to that, Sir Gordon, but I was rudely interrupted, in case you did not hear the interruption, by the hon. Member for Grimsby suggesting that I had lost his attention. There are only seventeen of his Socialist colleagues on the benches opposite—

The Chairman: That has nothing to do with the Amendment.

Mr. Nabarro: Very well, Sir Gordon. I have made my point.
This year, the Chancellor proposes to increase the sums of Exchequer advances by £430 million. Originally, in his Budget statement, he suggested that he would take powers for three years without any annual scrutiny by the House of Commons, but when the Finance Bill was published it was evident that he had conceded the point made in a number of Budget speeches by my hon. Friends and myself and had provided for an annual scrutiny of the sums involved, within Clause 72 of the Bill.
Unfortunately, there remains in this Clause one aggregate sum for all seven nationalised industries, which makes it

impossible for the Committee on the Finance Bill to investigate and scrutinise whether the sum being spent by an individual industry is too large or too small. Neither are we able, on the Committee stage of this Bill, to debate the programme of that individual industry and to decide, as just one example, in the case of Scottish electricity, whether it would not be more economical to invest in nuclear powers stations in the south of Scotland instead of water or hydroelectric works in the far north. We have no opportunity of scrutinising that kind of matter for it has been ruled out of order to debate individual capital investment projects during the Committee stage of the Finance Bill.
Furthermore, it has been ruled that these individual projects may not be debated on the Consolidation Fund Bill. Therefore, private Members of the House of Commons are precluded from having any opportunity to bring within Parliamentary accountability these very large sums of money on capital account, before the money is actually spent.
My right hon. Friend the Member for Blackpool, North (Sir T. Low), during the debate on the procedural Motion, suggested that these matters should properly be dealt with on Supply days. Of course, he was wrong. The subjects for Supply days are selected by the Opposition and Members on this side of the Committee have no opportunity to make any selection.
The purpose of these Amendments is quite simply stated. It is to bring within the ambit of the Finance Bill as a transitory measure, individual annual accountability for each of the seven nationalised industries, before the money is spent. In the past we have been able to debate the Reports and Accounts of these industries and the large sums of money expended on capital account only after the money has been committed and expended. If we agree to the Amendments today, we should have some sort of opportunity on later stages of this Bill and, if the precedent were created and followed, in ensuing years on every Finance Bill, to debate the individual investment programmes of each of these seven industries. We have none of these facilities at present.
My right hon. Friend the Member for Flint, West (Mr. Birch), in the course


of his Second Reading Speech on the Finance Bill, used these words:
Lastly, there is that awful millstone round our neck—the financing of the capital expenditure by nationalised industries. Just before the Budget, Mr. Manning Dacey said in a speech:
'Collectively, the public corporations do not earn enough to cover the cost of replacing capital used up in the course of the year's operations. After providing for capital consumption, they have had a combined deficit of the order of £200 million a year, and part of the Government's lendings below the line go to finance, not capital formation, but this current deficient deficit'
As I understand it, most if not all the nationalised industries depreciate on the historical cost basis. … If the screw were put upon them I believe that they could do more internal financing by effecting economies. Even if they could not, is it sensible to tax ourselves in order to buy electricity below the true cost of producing it?"—[OFFICIAL REPORT, 3rd May, 1960; Vol. 622, c. 934.]
Considerations of that kind, namely, the proportion of the capital investment programme of any particular nationalised industry which should be borrowed—and by "borrowed" I mean by resort to external borrowing either from the Exchequer or otherwise—and the amount which should be provided from internal resources, that is, from depreciation and profits or surpluses; the methods of accounting such deficits as may occur in the nationalised industries, notably the huge deficit on account of the railways and the £50 million deficit of the coal mines, are all matters which the House of Commons ought to be debating year by year.
As it is, we are precluded from doing so because year after year the Chancellor of the Exchequer insists upon this method in the Finance Bill of giving one aggregate sum. Our being ruled out of order by the Chair in trying to bring that down into individual amounts prevents Members of Parliament exercising proper accountability over these very large sums of money before committal.
On the last Clause, the Committee was concerned about relatively small sums for prizes on Premium Bonds. In this Clause, we talk of hundreds of millions of pounds, mostly found by the taxpayer within the Budgetary structure. I am not at all sure of the value of the Chancellor's proclamations concerning the control of public expenditure, during earlier stages of this Bill.
Perhaps I might repeat a passage from the Second Reading debate on this Bill When my right hon. Friend said:
The measures which I have just described will affect demand in the private section of the economy. I can assure the House that the Government are not neglecting the importance of applying the same more rigorous standards to the public sector as well, especially when they are considering proposals for further new increases in Government expenditure."—[OFFICIAL REPORT, 3rd May, 1960; Vol. 622, c. 890.]
In Clause 72, there is a proposal, to use the Chancellor's own form of words, for a "new increase in Government expenditure"; an increase of no less than £430 million. But no hon. Member of this Committee knows how this vast sum is to be spent. Not one. There are no programmes published for any of the seven industries which I have mentioned. No hon. Member knows what power stations are to be built. No hon. Member knows whether they are to be conventional steam or nuclear stations nor whether they are to be water or wind or nuclear or steam stations in the north of Scotland, or elsewhere. No hon. Member knows how the British Transport Commission is to spend £180 million on capital account this year or which particular ventures are to absorb this large sum.
How can the Chancellor in any truthfulness claim that the House is being kept properly informed, or is properly scrutinising the sums being allotted for these nationalised industries? This is no party issue. Hon Members opposite have complained over and over again about this very issue. They say that Tory Members in the country criticise and malign the nationalised industries and that they have inadequate opportunities in Parliament of defending them. Indeed, the hon. Member for Kilmarnock (Mr. W. Ross) said as recently as 7th April,
I shall be with the noble Lord the Member for Dorset, South and the hon. Member for Kidderminster if they return to Parliament's duty to address itself to Government expenditure and to the proper examination of Government expenditure."—[OFFICIAL REPORT, 7th April, 1960; Vol. 620, c. 643.]

Mr. William Ross: That is why I noted the hon. Gentleman's complete absence from the House when we discussed many more millions of pounds on the Navy, Army, and Air


Force Estimates. Then he showed no interest at all about Government expenditure.

Mr. Nabarro: I am grateful for that intervention. I should have thought that the hon. Gentleman who has been here for fifteen years would have realised that an hon. Member who intervenes in every debate is a crashing bore.

Several Hon. Members: Several Hon. Membersrose—

Mr. Nabarro: When I have finished I will give way. I do not intervene in every debate; of course not. The hon. Gentleman does, and that is why he is a crashing bore.

Mr. Ross: The hon. Member can achieve that by speaking on only one subject, and I would correct his analysis of my membership; I have been here for fourteen years—not fifteen.

12.15 a.m.

Mr. Nabarro: Approximately fifteen; we will not bather with a few months.
Putting frivolous matters on one side, the hon. Member for Kilmarnock will at once join with me in saying that the problem of Parliamentary accountability in respect of the huge sums of money employed in the nationalised industries is very far from solved, and the purpose of these Amendments is to make progress towards solving it. The first purpose is to specify the aggregate amount for a single year and to reduce the amount provided in Clause 72 by 10 per cent. The amount in Clause 72, for this year's increase for the whole seven industries is £430 million. The first Amendment seeks to reduce that sum by one tenth, or £43 million. Then follows the seven other Amendments, each dealing with a specific industry, and later seeking to reduce the allocation of capital to each by amounts which, in aggregate equal the figure of reduction of £43 million in the first Amendment.
The Chancellor will not be able to reply by saying that this method is effective from a House of Commons point of view. Whether or not it is convenient for Members to have this expenditure of huge sums of money by the nationalised industries discussed at the tail end of a Finance Bill is a different issue, but the Chancellor

cannot quarrel with me when I say that it is a thoroughly effective means of controlling the expenditure before the money is spent. If he does not want this method he should tell us what alternative method he proposes to give effect to the complaints and criticisms of so many hon. Members on both sides of the Committee have voiced in the last few months, to the effect that a major part of public expenditure inherent in the investment programmes of the nationalised industries is uncontrolled by the House of Commons, before the money is spent unless by a recourse of the kind proposed in this series of eleven amendments.
My ultimate objective is a separate Bill, to enable these sums to be lifted right out of the Finance Bill. Each year, as I postulated during my speech on 5th April, 1960, in the Budget debates, we should have a Capital Investment (Nationalised Industries) Bill, with eight Clauses, one for each industry, including the National Coal Board, specifying the amount to be sent on capital account. Then, the House of Commons could examine and debate all these important matters annually and adequately. For this year only I satisfy myself by putting down this series of Amendments, to make progress towards what I believe is a long-term objective.

Mr. John Peyton: I do not want to take up the time of the Committee at any length, but I want to say a word in support of my hon. Friend the Member for Kidderminster (Mr. Nabarro). The aim of the Amendments is not to ask for some precise scheme, but to tell the Chancellor that our aim and object is to secure for Parliament an annual opportunity for effective discussion of each capital investment programme of each nationalised industry. It is unnecessary for me to remind you, Sir William, that it is out of order for me or any hon. Member of the Committee to discuss the capital investment programmes of any of these great industries. That means that Parliament is not in a position of being able to perform the duties commonly understood by the electorate to be laid on its shoulders.
We are not asking a great deal when we demand that borrowers should explain to lenders—[Interruption.] I shall wait a little for the noise to die down.

Mr. Charles Loughlin: On a point of order. If the hon. Member cannot command my attention he has no right to complain.

The Deputy-Chairman: That is not a serious point of order, but I would ask the Committee to be as quiet as possible so that the hon. Member who is speaking can he heard.

Mr. Crosland: Further to that point of order, Sir William. I must point out that it was the hon. Member for Yeovil (Mr. Peyton) and a group of about four or five other Members round him who, while my right hon. Friend the Member for Huyton (Mr. H. Wilson) was speaking, made it very difficult for him to be heard because of their conversation. For the hon. Member, of all Members, to demand total silence from this side of the Committee is too much. Apparently he wants one law for the Tories and another law for us.

Mr. A. C. Manuel: Further to that point of order, Sir William—

Mr. Peyton: Further to that point of order—

Mr. Mitchison: How many points of order are there?

Mr. Peyton: May I say to the hon. Gentleman—

Mr. Manuel: On a point of order—

Mr. Peyton: The hon. Gentleman is becoming a great practitioner—

Mr. Manuel: On a point of order—

The Deputy-Chairman: Order. I understood that the hon. Member for Yeovil (Mr. Peyton) was seeking to address me on a point of order.

Mr. Peyton: It was my ambition to do so, Sir William. I was endeavouring to suggest that the hon. Gentleman, who is rapidly becoming a practitioner in self-righteousness, is preaching a bit too much to the Committee at this time of the night. Perhaps we could get on with the debate.

Mr. Manuel: On a point of order, Sir William—

Mr. Ross: Sir William, could you reply to the point of order?

The Deputy-Chairman: Order. The Chair must be given a chance. I call the hon. Member for Central Ayrshire (Mr. Manuel) to address me on a point of order.

Mr. Manuel: I wanted to ask your advice, Sir William. The previous occupant of the Chair did not rule that the Committee was too noisy when my right hon. Friend the Member for Huyton (Mr. H. Wilson) could not be heard by those of us who were interested in his speech because of a great deal of noise and interruption from the other side of the Committee. Now when there is a smaller amount of interruption from this side, the Chair is demanding quietness when the hon. Member for Yeovil cannot command the attention of the Committee.

The Deputy-Chairman: The Committee knows the position quite well. If an hon. Member feels that there is too much noise, he is entitled to appeal to the Chair if he so desires. All that the Chair can do, and all I am doing, is to point out to the Committee that we should keep reasonable silence to allow whoever is addressing the Committee to be heard. Mr. Peyton.

Mr. Ross: On a point of order, Sir William. I am sure that it was not intentional discourtesy on your part; it may be that you have forgotten the point of order that the hon. Member for Yeovil raised, but I am anxious to hear your reply to it.

The Deputy-Chairman: I think that the points of order have been sufficiently settled and that the Committee should get on with the business of dealing with this Amendment.

Mr. Peyton: I am much obliged. Perhaps we are none of us guiltless in this matter.
The point that lies behind these Amendments is one of great seriousness and should concern the Committee even at this late hour. The suggestion that I was attempting to make is that it is not unreasonable that borrowers of vast sums of money should be expected to explain to the lenders the details of the purpose for which those moneys are required. I am not for a moment counselling that Parliament should seek to


interfere in the day-to-day management of nationalised industries, but I do not think that it is an excessive or unreasonable demand—nor is it made from a partisan or party point of view—that Parliament should be entitled to review the capital investment programmes which are financed out of the national purse.

Mr. Manuel: I am very pleased that the hon. Member is not introducing a party point. Do I take it that he feels that the £250,000 annually provided by the Treasury for Messrs. MacBrayne, who run steamer services among the Islands, should be regarded in the same light as the money allocated to the nationalised industries?

Mr. Peyton: I hope the hon. Member will forgive me if I do not go fishing in those waters. I must decline to do so at this hour of the night because I am frightened of catching a red herring.

Mr. Fernyhough: Mr. Fernyhough rose—

Mr. Peyton: I will not give way again. I want to make a short speech and I hope that the hon. Member will allow me to make it.
The point which I insist on making, I hope very shortly, is that borrowers have no right to expect that lenders will forfeit their right to a clear explanation of the purposes for which the money is required. There are few more arid exercises than our normal Parliamentary discussions on the affairs of these great industries. We usually discuss matters which are long past, and the Reports on which our debates are based almost always consist in equal parts of gloom and antiquity.
The point which is often made to those of us who demand more effective Parliamentary control—and it is made again and again, with an innocent assurance which always surprises me—is that the Treasury can do this so well. Give the Department responsible for the industry more power and it will do the job so much better than the House of Commons can do it that is the argument. But in the past that has not been the case, and it is right for us in the House to express our profound disquiet at the lack of effective control over the programmes of these vast industries.
Nor am I impressed by the argument which finally reveals itself to be one of administrative convenience. I well know that it is felt that it is much easier to give the House a global sum about which to argue and thus to avoid the necessity of going into detail and cutting up the sum into the share to be obtained by each industry. But in my opinion we in the House are not concerned with administrative convenience. We are concerned with seeing that the taxpayers' money is spent properly on the purposes for which it was advanced and that a full account is given to Parliament.
It is sometimes suggested that the capital investment programmes of these industries would be frustrated if they were too regularly examined. I do not believe that any Member of the Committee would seriously countenance such an argument. There is no Government Department which does not operate on yearly estimates. My right hon. Friend the Member for Flint, West (Mr. Birch), in a speech on the Second Reading of the Electricity (Borrowing Powers) Bill, which has been quoted by my hon. Friend the Member for Kidderminster, dealt with this point fully and clearly. I do not believe that it is a suggestion which can validly be made—a suggestion that the nationalised industries should be free from any kind of annual examination by Parliament in respect of their capital investment programmes. Our objective —

12.30 a.m.

Mr. Mitchison: Would the hon. Gentleman allow me to intervene? I have been listening to his speech, as I did to the preceding one, with great interest. Many of his arguments seem to me to apply equally to cases where Government money is lent to private enterprise. We have had such cases lately. Do I understand that he would be in favour of a similar basis of examination in those cases?

Mr. Peyton: I do not know whether the hon. and learned Gentleman was present in the House during our discussion of the proposal to lend £120 million to two steel firms. I was here myself and I took part in the debate. I think that I made my views quite clear on that occasion, without going into them now, that I disapproved of the decision then taken.

Mr. Mitchison: I am much obliged to the hon. Gentleman for giving way


once more. He did, in fact, I think, vote for the advances, although I would not charge my memory with that. Now that it is being done, on the argument that he has just given, it would look as if there ought to be a similar investigation into advances of public money to private enterprise. I wonder whether, without going into the past, the hon. Gentleman could tell us whether he agrees or disagrees with that suggestion.

Mr. Peyton: I am not going to follow the hon. and learned Gentleman too far. I will content myself by saying—I do not want to go into the whole business again—that at least on that occasion the projects for which the money was borrowed were fully and clearly examined. That is just the gravamen of our case on this occasion, that we do not have the opportunity. We do not even have the knowledge of the outlines of the capital investment programmes for nationalised industries so that we might be free to express our view whether they are meritorious or otherwise.

Mr. H. Wilson: We quite take the point both of the hon. Gentleman and of his hon. Friend about wanting to get more control over these things, and advance control, but surely he is wrong in saying that there is not the fullest Parliamentary control on the enabling Bill which enables money to be lent either to gas, coal or electricity undertakings, or whatever it is, just as there was similar discussion though not, perhaps, as fully in the case of steel. Therefore, if he is now trying to add to the enabling Bill procedure a more short-run control over advances to nationalised industries, by the same token he ought to be prepared to concede it in the case of private enterprise. We know a great deal less of what is going on in those firms than we do in the case of the nationalised industries on which we have full reports.

Mr. Peyton: I can only blame myself for not having made my purpose a little more clear, because I am sure that the right hon. Gentleman is quick enough to see it if it is made clear. I am demanding an annual examination. The borrowing powers Bills come at sporadic intervals, every three or four years, and circumstances often change.
The whole purpose of this Amendment is to ensure that Parliament should have a regular and annual opportunity of discussing the investment programmes of the nationalised industries. I am not at the moment prepared to go into back history and into what happened in the steel industry, the cotton industry or any other industry. I am contenting myself at the moment with saying—and I say it with great seriousness—that Parliament should have an annual opportunity of reviewing the investment programmes of these nationalised industries.

Mr. Wilson: The hon. Gentleman was less than just to himself. He made that point perfectly clear as far as we on this side of the Committee are concerned. We understand that he wants annual control of money voted in the general sense by the enabling Measure.

Mr. Peyton: Where powers have been taken.

Mr. Wilson: I used the word "powers" Where powers are taken to lend to a nationalised undertaking the hon. Gentlemen wants annual control over it. We understand that. We were trying to suggest to him that steel and cotton are exactly parallel to the Measures which give power to lend to the nationalised industries. If he insists on an annual control of the money advanced under these powers, would he not think it right that equally there should be an annual control over money spent on cotton, steel or any of the other industries? If the hon. Gentleman does not agree, is he not laying himself open to a charge of being partisan?

Mr. Peyton: I do not think I can accept that. I made my views on the question of the steel industry perfectly clear at the time, and I suspect that I should be ruled out of order were I to go into that question again now.
The point I am concerned to make is that the aim and object behind these Amendments is eventually to produce a situation where these nationalised industries can or should at least have the opportunity, or the duty, to play some part in raising their own capital requirements. Secondly, I should like—although it may be that this is vastly ambitious—to see restored to Parliament some vestige of its authority over these


matters. I do not believe that it is good enough for us from either side of the Committee to continue to disappoint those people who still cherish some spark of hope that Parliament exists for the protection of the national resources.

Mr. William Blyton: There would have been one less hon. Member on these benches tonight had not the hon. Member for Kidderminster (Mr. Nabarro) informed me that he would refer to my weekend speech on the nationalised industries. Instead of 17 hon. Members present there would have been 16.
It is not for me to interfere in the row between the Government Front Bench and the back benchers opposite. Had it happened on this side of the Committee tomorrow the newspaper headlines would have been "Another split in the Labour Party" We have been twitted tonight on the fact that there are only 17 hon. Members on these benches while the benches opposite are crowded. We can understand that there are hon. Members opposite who wish they were at home and they are not pleased with the hon. Member for Kidderminster—

Mr. Nabarro: Oh, yes, they are, look at them all smiling at me.

Mr. Blyton: Hon. Members opposite are present because the Government have to keep a House and a hundred hon. Members to go into the Division Lobby. I shall never forget that when the Labour Party were in power Lord Booth by stated, "We shall keep that up all night, we shall harry them to death" So hon. Members opposite should not twit us, because their record in this matter is not good.
I have a certain amount of sympathy for the hon. Member for Kidderminster on the question of accountability0—

Mr. Nabarro: Come over to this side of the Committee.

Mr. Blyton: —but beyond that I do not go. The Tory view of the publicly-owned industries is reflected every day in this Chamber in the way in which hon. Members opposite attack the industries either in Questions or in speeches. The argument regarding accountability is directed against the

nationalised industries. It is true to say that the only time the nationalised industries are discussed is when the Opposition provide a Supply day for the purpose.
We are not to blame for that. Hon. Gentlemen opposite will remember that the Leader of the House stood at the Dispatch Box and moved that the Select Committee on Nationalised Industries be set up. The hon. Member for Yeovil (Mr. Peyton) sits on the Select Committee for Nationalised Industries, so he cannot complain that he does not know anything. It is an act of moral courage to pick up all the papers on the railways in the Select Committee upstairs. The hon. Gentleman cannot say that he is ignorant of how the money has been spent and of the plans, because he has reams of paper on the subject.
I can understand the hon. Member for Kidderminster shouting from the house tops about accountability, but the hon. Member for Yeovil should be the last to shout. He has put his name to an Amendment dealing with the railways, but he has spent twelve months dealing with the railways in the Select Committee and he knows about every penny which has been spent and every scheme for modernisation which has been put forward.

Mr. Peyton: I have the great privilege of serving on that Committee with the hon. Gentleman. He will know, as I do, that we do not have the knowledge for which I ask now, namely, that the House of Commons should be fully informed before the event of the money which is to be spent.

Mr. Blyton: For twelve months I have listened to the Chairman of the British Transport Commission, who has justified every penny which has been sanctioned by the Government for modernisation schemes. I have never heard the hon. Gentleman complain that information has been withheld from him.
The money allocated by the Chancellor of the Exchequer to the nationalised industries is not a subsidy. It is borrowed and it has to be paid back at over 6 per cent. The National Coal Board has paid £258 million in interest to the Minister of Fuel and Power since vesting date but has paid only £54 off the principal.
The hon. Gentleman talked about self-financing. Hon. Gentlemen opposite have stopped the National Coal Board from being self-financing for the whole time it has been in existence. They never allowed the Board to build up reserves. Why should they now demand that the nationalised industries be self-financing when they have stopped the National Coal Board over the last ten years from developing its own resources to try to finance its own capital expenditure?
The taxpayer should know that all the shouting tonight is only about lending money to the nationalised industries. It is a long term investment by the taxpayer, for which he is paid 6 per cent. [Interruption.] We in the North have known for a long time the opinion of the hon. Member for Sunderland, South (Mr. P. Williams). He should at least sit quietly and let me have my say, otherwise I shall be speaking for a long time. I know more about this subject than he does.
I say emphatically to the taxpayer that he is lending money as a long-term investment and he is receiving interest on it. I have already quoted the figures in relation to the National Coal Board. Accountability has been a thorny problem, and that is why these Amendments have been tabled. I have some admiration for the hon. Member for Kidderminster, whom I regard as an expert in fuel matters, but I think that he sometimes carries his play acting a little too far in the House of Commons. Nevertheless, I regard him as an expert.
How can the hon. Member for Yeovil expect a nationalised industry to submit each year every development scheme to the House of Commons and expect the House to discuss all the major development schemes? This applies to any of the nationalised industries mentioned in the seven Amendments.
12.45 a.m.
First of all, we would not have enough Parliamentary time, because to discuss just one major development scheme in a nationalised industry we would need not a day but a week. We would need the advice of technicians and experts. We have found that out during the five years during which I have sat on the Estimates Sub-Committee. The Government turned down our recommendations that all major

schemes should be put in the balance-sheets each year so as to give a progress report about the schemes for which money had been sanctioned. Hon. Members opposite have nobody but themselves to blame that the recommendation was not accepted. If what they seek by way of accountability have not been granted, hon. Members should not criticise this side of the Committee. They should take up the fight with their own Front Bench—and I shall not interfere.

Viscount Hinchingbrooke: One of the signs of general public dissatisfaction is when a subject becomes a running sore in Parliament, and there is no doubt at all that for the last six or seven years the question of the financing and management of the nationalised industries has been that running sore. I think it is time that the Government made some pronouncement to end that situation, and they should create a new method of accountability which is broadly satisfactory to both sides of the House.
I served on the original Select Committee on the Nationalised Industries which went into the ways and means by which those industries could be made accountable to Parliament. After a couple of years, the Committee's only conclusion was that a permanent nationalised industries committee should be set up to watch them. The hon. Member for Houghton-le-Spring (Mr. Blyton) and my hon. Friend the Member for Yeovil (Mr. Peyton) are members of that committee now. No doubt it has done wonderful work. No doubt reports are issued, but those reports do not really come on to the Floor of the House for debate, and they do not make much impact on the public. From that point of view, they are unsatisfactory.
The result is that year by year we have debates like this late in the day. I remember that one such debate in 1956 went on until 4 o'clock in the morning—the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) took part in it—during which we objected to the borrowing powers being given to the gas and electricity industries—trying to curtail the amounts, being frustrated, and having no solution offered by the Government. Repeatedly that sort of thing occurs and there is a good deal of opposition from this side. It cannot be satisfactory for Conservative Ministers to face


it year after year. The situation must be halted.
I am one of the, perhaps, very few who regard the nationalised industries as an incubus on the body politic, although I do not by any means detest them as the hon. Gentleman tries to make out. On the contrary, one of my happiest recollections is working in a signal box during the 1926 General Strike. I adore the railways, and shall always do so.
What we want, however, is to see them hived off from the Exchequer and made independent and subject to market disciplines. It was a source of great grief to some of us when, in 1956, the present Prime Minister—then Chancellor of the Exchequer—took a wrong turning, as it seemed to us, in the financing of these industries. Because of a complex series of reasons that we could quite understand, he deserted the previous method, which was to finance the nationalised industries on the market by Treasury guarantee. It put out the general financing of the current debt, it was very awkward to fit in with the Government's financing programme, and so on. He made them responsible to the Exchequer, putting them below the line. From that time on, we have had these annual Measures.
Nobody, I think, wants to revert to the situation which was unsatisfactory before 1956. I would take two jumps at it and so arrange matters that the nationalised industry would go to the market. It would need a great deal of preparation in the market, I admit. It would need a very happy and affluent situation in public investment to be able to take up the requirements of the nationalised industries. It would need a good deal of reorganisation of the nationalised industries, particularly of the railways, before they would be ready to go to the market.

Mr. H. Wilson: On a point of order, Sir Gordon. While we all understand that this is a very important point and many of us wish to debate it on the Motion, That the Clause stand part of the Bill, is it in order on these Amendments, which are directed mainly to cutting the amounts available for individual boards or industries, to raise the whole subject of the financing of the

nationalised industries and fixing the market in order that it can be done in another way? We are quite prepared to debate the matter on the other Question, but is it in order on these Amendments?

The Chairman: I hope that the noble Lord is making only a passing reference to the point.

Viscount Hinchingbrooke: Further to that point of order, Sir Gordon. I understood that these Amendments were all being taken together and the debate in principle was being taken now and that the debate on the Motion, That the Clause stand part of the Bill, would be of relatively little significance.

Mr. Wilson: Further to that point of order. I am not aware that you have indicated, Sir Gordon, that the debate on the Motion, That the Clause stand part of the Bill, will be of little significance. You advised the Committee that it would be for the general convenience that we should take the Amendments together, but that was because they were all of a very similar character. None of them, if I may say so, raises the wider issue which the noble Lord is now putting before the Committee. The Amendments raise merely the question of the amounts available for individual boards, and they were so spoken to by the hon. Member for Kidderminster (Mr. Nabarro). Is the noble Lord in order in trying to turn the debate on the Amendments into a general debate on the financing of the nationalised industries?

Mr. Nabarro: Further to that point of order, Sir Gordon. You will recall that, in the course of my speech—I am not sure that the right hon. Member for Huyton (Mr. H. Wilson) did not miss this part of it—I made it perfectly clear that the first of the 11 Amendments is the master Amendment dealing with the aggregation. There are then seven Amendments, one for each industry, and the amounts of the reduction in each of those Amendments added together make the total reduction moved in the first Amendment. By that means, Sir Gordon, the whole topic is covered by the 11 Amendments, including, I submit, the principle of this method of financing.

Mr. Wilson: I am sorry to take the matter further, Sir Gordon. We fully understand what the hon. Member has in mind in his aggregation Amendment and his separate and specific Amendments, but I humbly submit to you, with respect, that these Amendments deal only with amounts. They do not raise the whole subject of what was in the Radcliffe Committee's Report or what might be discussed on the Motion, That the Clause stand part of the Bill. I submit that this debate should be relatively narrow.

Mr. Amory: Further to that point of order. I understand the point which the right hon. Member for Huyton (Mr. H. Wilson) has raised, but I believe that, in practice, it will be extremely difficult to reply fully to the points raised by my hon. Friend in these Amendments without saying a good deal about the general method of financing. I think it will be very difficult to separate the two.

Mr. Wilson: Is the Chancellor of the Exchequer trying to suggest that we should, therefore, take the debate wider than what is covered by the Amendments to the point, for example, where we shall be discussing whether this money should be raised in the market? Surely, that goes very wide indeed of these Amendments.

Mr. Nabarro: It will be within your recollection, Sir Gordon, that each of these industries already has statutory powers to seek its moneys from the market or by Exchequer advances. For such sums as an industry may not wish to take up from Exchequer advances it can resort to the market. One of the purposes of the Amendments is to reduce the amount of money available to each industry. I submit, therefore, that we may discuss at the same time the very point which my noble Friend is making about recourse to the money market.

Mr. Mitchison: As I understand it, Sir Gordon, we are discussing Treasury advances and nothing else. We are not, therefore, discussing advances which public industries may borrow, and are authorised to borrow, in the open market. I understand the noble Lord to have been talking about just that. He was suggesting that there might be further recourse to the open market.
Moreover, if I understood him rightly—I may have misunderstood him—the noble Lord was suggesting nothing less than a complete handing over of these nationalised industries to private enterprise through a sale or borrowing in the open market. If he was not suggesting that, I mistook him and will not press the point. On the first part, however, I submit that what is sought to be said now about borrowing in the open market goes well beyond the Amendments.

The Chairman: What we are discussing is Treasury advances, and reference has been made to borrowing in the open market. I have expressed the hope that it would be only a passing reference to that and that the Committee would not go into it in detail.

Mr. Wilson: I raise the question only because we want to make as much progress as possible and to avoid duplication between the debate on the Amendments and on the Motion, That the Clause stand part of the Bill. The debate has, however, gone wide. Are we to understand from your Ruling, Sir Gordon, that what the Chancellor thinks will be necessary is permissible and that he may widen his reply, and, therefore, the debate on the Amendments, to a general discussion of the methods of financing the nationalised industries?

Mr. Amory: I had thought that the Committee would probably consider it most convenient for us to have just one debate covering the Amendments and the substance of the Clause, but I do not know what the Committee would wish to do.

Mr. Mitchison: Further to that point of order. The subject matter of the Clause is correctly indicated by the sidenote:
Exchequer advances to nationalised industries and undertakings
I submit that on the Motion, That the Clause stand part of the Bill, it is not permissible to discuss other methods of financing nationalised industries.

Viscount Hinchingbrooke: I was not proposing to go into the structural alterations which would be necessary in the nationalised industries—

Mr. Mitchison: I am on a point of order—

Viscount Hinchingbrooke: I am on a point of order. Sir Gordon will be good enough to rule on this when the opinions are expressed. I do not propose—I will pass rapidly from the point—to go into the question of the alteration in the structure of the nationalised industries such as would enable them to go to the market for future capital. I am saying that our efforts in this process in which we are now involved should be directed to that end eventually, but I was not proposing to go into the details of it. Am I in order in continuing on that line, Sir Gordon?
There are two situations before us. We do not want to go back to the pre-1956 situation—

Mr. Mitchison: On a point of order. I am sorry to interrupt the noble Lord, but I asked a question and I believe that it would be for the convenience of the Committee if we knew where we were. My question is whether it is permissible, either on the Amendments or on the Motion, That the Clause stand part of the Bill, to go beyond, except for casual reference, the subject of Exchequer advances to nationalised industries.

The Chairman: I do not see how, on the Motion, That the Clause stand part of the Bill, it is permissible to go much wider than in the debate on the Amendments.

Viscount Hinchingbrooke: At this late hour, I can say what I have to say fairly shortly. The Committee should differentiate between the borrowing powers Bills which we have from time to time on the nationalised industries, to which the right hon. Member for Huyton has referred, and these annual Parliamentary occasions on the Finance Bill. It is those other Bills which we have already passed which give the nationalised industries their borrowing powers. This Clause is concerned entirely with opening the Exchequer chest and allowing the money to be issued forth for the purpose of satisfying the claims of the nationalised industries for borrowing under the powers already granted to them.
1.0 a.m.
Personally, I do not like a Clause of this sort appearing in a Finance Bill. All the other Clauses are concerned with raising revenue by taxation. This is a technical Clause which is included in the

Finance Bill and which acts rather like the Consolidated Fund Bill acts, that is, it opens the Exchequer chest and permits these moneys to be issued forth, and I would like to see that process brought to an end.
My hon. Friends are perfectly right to ask for some annual Parliamentary occasion upon which the future financing of the nationalised industries can be regularly discussed. Nobody wants to do that on a year-to-year basis alone, because the nationalised industries are long-term borrowers—the Electricity Council, the Coal Board, the railways and so on all want to know where they are for a two, three or four-year period. I would like to get rid of this business of passing this money through the Finance Bill and discussing the future of the nationalised industries as we are at this moment.
I draw my right hon. Friend's attention to the proposal that on the next occasion when a nationalised industry borrowing power Bill comes along he should make an attempt, to use a term applicable to tomorrow, to bring the horses up to the starting gate together, that is to say, to bring all the nationalised industries into that Bill with their borrowing requirements for three or four years, with eight Clauses in the Bill.

Mr. Mitchison: Further to that point of order. I am sorry but we are discussing the Exchequer advances to the nationalised industries, and some Amendments to the Clause. What is being raised is the whole question of how this matter should be brought under Parliamentary control and the like. With respect, I cannot see how that arises on the Amendmenths. To follow the noble Lord's metaphor, what we are discussing is how many legs the horse is to have and not how the horse is to be brought up to the starting gate.

Viscount Hinchingbrooke: I am trying to advance reasons why I object to the Clause and why, in default of some explanation or proposal by the Chancellor of the Exchequer about what may be substituted for it next autumn or even next spring, I shall vote against it tonight. I do not like this Clause appearing in the Bill. I want other methods to be adopted and unless we can get some argument put forward about what is to be substituted—

Mr. Mitchison: Further to that point of order. How can that arise on the Amendment? It might arise on the Motion, That the Clause stand part of the Bill.

The Chairman: The noble Lord was anticipating that Motion.

Viscount Hinchingbrooke: I thought you said a moment ago, Sir Gordon, that discussion on that Motion could not go wider than the aggregate of the Amendments.

The Chairman: The debate on the Motion, That the Clause stand part of the Bill, cannot go wider than the Clause.

Viscount Hinchingbrooke: I think that I had reached the end of what I wanted to say. I hope that my right hon. Friend is prepared to give some indication to the Committee that this very disagreeable process, which hon. Members on this side of the Committee have resented for years, will be ended and that the Government will come forward in a short time with a new series of proposals which will at once do with the nationalised industries what everybody wants to do, recognising the high purpose which they serve in the State, and which will satisfy Parliamentary accountability.

Mr. H. Wilson: Sir Gordon—

Mr. Nabarro: Do not let the debate be curtailed. There are other back benchers who want to speak.

Mr. Wilson: Any member of the Committee is entitled to speak if he catches your eye, Sir Gordon. I have no intention of curtailing the debate, but I want to make one or two brief observations on what the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) has said. If any hon. Members opposite, or any of my hon. Friends, wish to follow me, no doubt they will seek to catch your eye in the ordinary way, Sir Gordon.
There was one point which the noble Lord made with which I find myself in some degree of sympathy. It was one of his main points when, towards the end of his speech, he said that there was something inappropriate about putting

this kind of Clause in the annual Finance Bill. The other Clauses refer to taxation remission and taxation increase and so on, whereas this—and he said it not unfairly—was something more appropriate to the Consolidated Fund Bill; in other words, it was something more appropriate to the regulating of exenditure rather than something concerned with the raising of expenditure.
There is a good deal to be said for that point of view, and one could almost say that to include this Clause in this Bill, and to use an old Parliamentary phrase, is tagging something on to a Bill the main purpose of which is to deal with taxation. None would say that the Chancellor is out of order; we should not have had this discussion had he been, but we are dealing with a Bill to raise taxation
…and to amend the law relating to the National Debt…
and the Chancellor is well within order when he includes this aspect of the National Debt.
I gather that the Chancellor's motive in bringing forward this Clause is to make it easier for the Government to administer the National Debt in the markets generally. Nevertheless, there is something to be said for the noble Lord's point of view; but, equally, I say to him that, whatever the rights or wrongs, whatever the merits or demerits of the general argument put forward by the noble Lord and the hon. Member for Kidderminster (Mr. Nabarro), it is our duty, instead of trying to achieve it by Amendments of this kind which are drafted in a form purporting to reduce the amount of money which can be borrowed, to see if it would have been better if the noble Lord and his hon. Friend had put down a Motion. They could then have sought to debate the matter in a proper manner rather than to do it by Amendments by the back door—not back door, but perhaps by the side door—to this part of the Finance Bill.

Mr. Nabarro: The right hon. Gentleman has forgotten what transpired on 7th April. The Chancellor had to move a procedural Motion to put this into the Finance Bill. My noble Friend and myself, and twenty other hon. Members voted against that Motion and against


the idea of this method of financing in a Finance Bill, but we were defeated by the Government.

Mr. Wilson: I remember the occasion; it took place at about ten minutes to eleven; a good deal earlier than we are discussing the matter now, but if the hon. Gentleman wants to raise in a positive rather than in a negative sense what was then done, I suggest to him that it would have been more appropriate if we had had a Motion in his name or that of his noble Friend.
However, we are now in the position that the Committee is being led along, whether we want to be or not, into a fairly fundamental debate on procedure. I do not think that the hon. Member for Kidderminster would deny that phrase; perhaps I am right in thinking that he came here with that intention.

Mr. Nabarro: I did.

Mr. Wilson: We are being led along in that way when we ought more properly to be concerned with amounts of money.
What I should feel it appropriate to do very much depends on my understanding of the Rulings you have given, Sir Gordon. You will forgive me if I put it to you that I am still not quite clear about them. You ruled finally, in reply to the noble Lord, that he should make only a passing reference to alternative means of raising money. As far as I know, no Ruling was given to stop anybody talking about future methods of public control of this expenditure, and I thought I heard you say at one point that you did not see how the debate on the Clause could go any wider than the debate on the Amendment.
The question I want to talk about most is that relating to the period for which these powers are being given. The Clause provides that the period shall run until 1963. The Chancellor has taken his courage in both hands and is taking powers for three years compared with one year, as has been usual in the past. That has been very much queried by the hon. Member for Kidderminster, who wants annual control, although in a different form. Would it be appropriate, in discussing these Amendments, to deal with the

question whether it should be one or three years, or possibly in perpetuity, or should we leave the discussion of that matter until we come to the Motion, That the Clause stand part of the Bill?

Mr. Nabarro: Is the right hon. Gentleman quite sure that he is right in what he has said? The Clause gives annual control. The first part of the Clause takes us to August, 1963, and paragraph (b) provides that:
no advances shall be made under that section during either of the subsequent two years unless provision has been made by order of the Treasury
That is an affirmative Order, which provides annual accountability.

Mr. Wilson: The hon. Member is quite right. The reference to 1963 was a reference to the original powers given in the 1956 Act. I was misled by assuming that the reference was in accordance with what the Chancellor told us in the Budget debate, but I should have recalled that the Chancellor has produced a Bill rather different from his intentions in the Budget debate, owing to pressure from his hon. Friends. We debated the question whether he should take powers for one or three years, or an even longer period, last year and in previous years. Since last year we have had the report of the Radcliffe Committee.
Perhaps you would now tell us, Sir Gordon, whether this point should be taken now or in the debate on the Motion, That the Clause stand part of the Bill.

The Chairman: It would be convenient to discuss the whole Clause on the Amendment.

Mr. Wilson: Does that mean that the main Question will have to be claimed?

The Chairman: If there has been a discussion on those lines, I would hope we would not want any further debate.

Mr. Wilson: I do not want to prolong the debate unnecessarily. The chief offender has now left the Chamber; he seemed to suggest that hon. Members on this side of the Committee have been holding up progress, but I think the Patronage Secretary would acquit us of any such action in the last few days. But if it is convenient to debate this point


now rather than on the Motion, That the Clause stand part of the Bill, I shall be happy, always reserving the right to continue the debate further on that Motion if it should prove necessary.
When the present Prime Minister, then Chancellor of the Exchequer, first put a Clause of this kind into the Finance Bill of 1956—I am surprised to see the hon. Member for Kidderminster leaving the Chamber after all he has said during the period when I was alleged not to be listening.

Mr. Nabarro: I got cramp in my legs and I wanted to stretch them.

Mr. Wilson: That is not the part of our anatomies that we get cramp in when we listen to the hon. Member going on for Clause after Clause in the Finance Bill. But he is entitled to stretch his legs. We only wish he had done so about two hours earlier. We should have been home and in bed by now.
1.15 a.m.
When the present Prime Minister introduced a Clause of this kind in the 1956 Finance Bill—and the noble Lord was right in saying that we were debating it in the not so small hours of the morning—the debate lasted for two hours and I believe I obliged for about an hour between 5 and 6 a.m.—a performance which I shall be only too willing to repeat if encouraged to do so by hon. Members opposite, although at this moment I do not feel so encouraged.
On that occasion the then Chancellor was talking about the arrangement which had obtained until that time, where the money was raised under Treasury guarantee on the market, with the exception of the special arrangement for coal. He said:
There are two great disadvantages in that point of view, particularly in the present circumstances. The first is that, by and large, official support can only be given to these stock issues by borrowing the necessary funds on Treasury bills. That is the only way in which we can give support to those issues when they are not fully taken up in the market, and the continual issuing of Treasury bills adds to the liquidity of the banking system, and so often to the difficulties of operating monetary control. That is the first difficulty in the present circumstances.
The right hon. Gentleman continued:
The second is that frequent issues of the stock of these boards, which are made by

Statute under Treasury guarantee, and therefore involve Government credit, have to be made at inconvenient times; not when it would suit the market, but at the particular time when a particular industry has reached the limit of its borrowing powers from the joint stock banks. The fact that they are going on at a time necessary to them, but not suitable for the broad management of Government credit and Government funding, prejudices the general Government programme of borrowing and refinancing and funding.
He concluded by saying:
I ask the Committee to accept the view"—
this is the present Prime Minister—
that since the Exchequer has in present circumstances to bear the burden of providing at least the bulk of the capital finances of these industries, it is better, in the wider interests of the management of Government credit and funding Government debt, that the Exchequer should be in control of the whole operation"—[OFFICIAL REPORT, 12th June, 1956; Vol. 554, c. 527–8.]
As I understand it—I hope the Chancellor is not going to run away on this one—that has been the attitude of the Government ever since 1956, and it was a view which was fully underwritten by the Radcliffe Committee when it reported last August. I think the noble Lord will agree with that summary of what the Radcliffe Committee reported. I know that hon. Members opposite do not accept any Report which is inconvenient to them, whether it is Radcliffe or Devlin or anything else. I remember when there was another Report on the Bank Rate Tribunal two years ago, and we were all expected to accept that.
I agree that none of us does. But if there has been one thing more noticeable than anything else about the debates on this Bill, it has been the fact that the Chancellor has used the Radcliffe Royal Commission, when he was following its recommendations, as an argument against us, and when he was rejecting its recommendations he has not always followed Radcliffe. I admit that we have done the same. I agree that we do not have to follow Radcliffe on monetary policy in all its details. I have made clear that we do not support it in all its details, but we support it a good deal more than do hon. Members opposite.
I mention this for what it is worth. The Radcliffe Committee considered this matter with great expertise and with access to all the facts affecting not only the nationalised industries but the City of London, and took the view that this


is the right way to go about it. No Chancellor of the Exchequer has ever got up at the Box since 1956 and said that this is the wrong way to do it. I do not think the present Chancellor thinks it is the wrong way to do it. I do not think he would have introduced this Clause if he had intended to run away from its impilcations this evening.
Nevertheless, successive Chancellors, following the decision of the present Prime Minister in 1956, have unfortunately only prolonged these powers for short periods ahead. In one case it was two years, but mostly it has been one year. Last year we tried to get the Chancellor to take powers for an indefinite period and we were voted down, no doubt to the delight of the hon. Member for Kidderminster. We pressed him on that matter at that time and certainly we hoped—we said it in the debate—the Chancellor could show a little more courage and take powers for a longer period ahead. We were delighted when we heard the Chancellor announce that he was taking powers for three years. But of course, trouble arose. Pressure was put upon him.

Mr. Nabarro: Hear, hear.

Mr. Wilson: It was not altogether popular as a Budget, I understand, in the 1922 Committee on other grounds. As on dividend stripping two years ago, on Clause 26 this year and on this Clause on previous occasions, the Chancellor turned tail and fled under the pressure of the hon. Member for Kidderminster, though why he could not have found a better reason than that for doing it I cannot imagine.
We have this Clause on a one-year basis, and still hon. Members opposite are not satisfied. There may be a case for examining not merely this but all other aspects of Government expenditure on a more searching basis; we have some ideas about that. I think that the nationalised industries are the last item in the Budget to treat on this basis, however, because here are no industries in the country which are so much under the scrutiny of the House in one way or another, not to mention the scrutiny of the Press, as are the nationalised industries. The House gives three days every year for debating the nationalised industries, apart from

Supply days, and we have often used Supply days for this purpose. In addition, as my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) said, these industries are fully investigated by the Select Committee on the Nationalised Industries.
What we complain about is that we have all this partisan "binding" by hon. Members opposite about the nationalised industries but not one of them suggest that similar powers be given in relation to private industries. We are voting very considerable sums of money to private industry. I should be out of order if I pursued that too far. Do hon. Members propose that we should go into the same detail about them? Is there to be a Select Committee on privately-owned industry comparable with the Select Committee on the Nationalised Industries? Are three days to be regularly allotted every year by the Leader of the House for the purposes of debating those industries? No one would suggest doing that, and yet Government money is going into those industries under conditions about which we know very little. Conditions in these privately-owned industries may change from year to year, and yet the money will continue to flow to those private firms under the powers given by the House. It might therefore be right for us to scrutinise the amount of money going to them.
The nationalised industries are very carefully scrutinised by Parliament. The partisan prejudices of hon. Members opposite would ensure that, if nothing else did. We have a very one-sided approach to this question. I hope—although I have not a great deal of hope, because I know how susceptible the Chancellor is to back-bench pressure—that on Report the Chancellor will go back to taking this power for a longer period ahead so that there is no question that it will not continue to be Government practice to raise money for the nationalised industries in this way and not to force them on to the market in ludicrous circumstances. If he wanted to force them on to the market, the whole basis of the financing and self-financing of these industries must be on a different basis. For instance, it would mean that we should have to alter the whole basis of railway financing and the question of road competition.


Hon. Members cannot have it both ways. They cannot treat these industries as though they are monopolies under Parliamentary control and scrutiny in this way and at the same time fetter them so that they cannot even compete, as any private firm can compete, with some of their main rivals and competitors.
Clearly, whatever monopoly coal may have had, it no longer possesses. It is facing heavy imports of fuel oil at prices considerably less than the price of crude oil, which raises a very serious point; for if that is so, it clearly follows that the ability of the coal industry to finance itself is very much reduced by those circumstances. We know what has happened in one industry after another. As my hon. Friend the Member for Houghton-le-Spring said, when these industries sought to improve their financial position they were stopped by various kinds of administrative action by Ministers—the Minister of Power in the case of the coal mines, the Minister of Transport, and even the then Prime Minister in 1952, in the case of the railways. Therefore, we cannot really look at these things in the rather simpleminded way that the hon. Member for Kidderminster brings to these events.

Mr. Nabarro: There is nothing simple about him.

Mr. Wilson: I did not say that there was anything simple about the hon. Gentleman; I said "simple minded" We cannot look at the matter in the rather narrow-minded way that the hon. Gentleman looks at it, if he prefers that phrase. We certainly ought to look at the problem rather more widely. Although I do not think that this is the appropriate occasion for doing that, I think that the Chancellor should be given support to continue with his method of borrowing. I only hope that he will take powers to do it for a longer period than just one year ahead.

Mr. Amory: I think—

Mr. Jack Jones: On a point of order. May I ask you, Sir William, if it will be possible to continue the debate on this series of Amendments after the Chancellor has spoken? I have been sitting here for 10½ hours and have not said a word.

The Deputy-Chairman: We have not yet finished the debate on the Amendments.

Mr. Amory: I have no desire to bring the debate to a conclusion, and I shall look forward to hearing what the hon. Member for Rotherham (Mr. Jack Jones) has to say, but I think that it might help if I made a few comments on what hon. Gentlemen have said so far in the debate.
I am not going to deal with the history of the financing of the nationalised industries because that is well known to the Committee. I would only say that in present circumstances when these industries cannot raise money on the open market without a Government guarantee I believe that the method of direct finance from the Exchequer is beneficial to the Exchequer and also to the national economy.
A great deal of the interest of this Clause arises out of the mistaken belief, I think, that it is by this Clause that Parliament controls the borrowing of the nationalised industries. Of course that is not so. Each one of the nationalised industries has already been granted authority by Parliament to borrow up to a certain limit, and thus the power of the Electricity Council to borrow from all sources was increased from £1,400 million to £1,800 million under the Electricity (Borrowing Powers) Act, 1959. In addition, the Minister of Power has power to increase this limit by Order.
This Clause does not in any way fetter the borrowing rights which Parliament has granted to these industries or alter the borrowing limits which Parliament has already fixed. It merely opens to the industries the possibility of borrowing from the Exchequer the moneys which they are entitled to raise. The system which we wish to use in present circumstances, lending by the Exchequer rather than borrowing from the market, is a choice dictated by the interests of the management of the National Debt, as I have previously mentioned.
This method may have certain conveniences for the nationalised industries, but these are not the primary considerations. The Committee is being asked to approve the Clause not in order to give a right to the nationalised industries but in order to give the Exchequer greater


flexibility. If the Clause were not passed the power of the nationalised industries to finance their investment programmes within the limits provided would not be one whit affected, but as Chancellor I should be seriously handicapped in my ability to manage the national finance.
The Clause is really a Treasury Clause and not a nationalised industries Clause. It is concerned with the technique of the management of the National Debt, not with the investment programmes of the basic industries. The amount prescribed in the Clause, £2,050 million, is built up in a rather complicated manner.
As Chancellor I am concerned with two quite separate calculations in this connection. In the first place, I am concerned with the amount which the nationalised industries in the execution of their approved investment programmes and in the light of their anticipated commercial prospects will need to borrow from the Exchequer during the coming year.
1.30 a.m.
All estimates of Exchequer lending to the nationalised industries are calculated as to the national financial year. Estimates for borrowing are prepared for these years with as much precision as is practicable; though it will be appreciated that in the event these estimates may prove incorrect, because the industry's need to borrow either for fixed or working capital is influenced not only by the progress of carrying out the investment programme but by its current commercial fortune, because that determines the amount of self-financing it can do. So the result may be more or less favourable than the estimate. The amount for the financial year recently started was sot out in the financial statement presented art the time of the Budget. For the seven nationalised industries it was £482 million and I have already given a detailed breakdown of that sum.
Secondly, as Chancellor, I must take the necessary measures to ensure that in the period April to August, 1961, the Exchequer will have authority to issue funds to those nationalised industries. It is not practicable at this moment to calculate precisely what each one of those industries will need during these five months of next year. As I explained earlier, the calculations

of borrowing from the Exchequer refer to financial years and not to five-monthly periods. At a later stage during this financial year there will be discussions with the industries in order to discover what their needs will be for the financial year 1961–62 and what can be approved; that is their needs for borrowing and for their whole investment programme. This figure is of course essential for the preparation of the Budget. But in the meantime I must make the normal prudent calculation's to ensure that I am able to meet the call for funds from the nationalised industries, provided those calls are within the statutory limits of borrowing which Parliament has prescribed for each industry.
How am I to calculate these amounts? There is no reason to expect that the need for funds will be very greatly different in the 12-month period, August to August, from the 12-month period of the financial year. Five-twelfths of £482 million is just over £200 million. Therefore, the Exchequer must be in a position to advance to the nationalised industries during the period 1st April, 1960, to 31st August, 1961, £682 million approximately. Last year Parliament authorised the Exchequer to advance up to £1,620 million by the end of August of this year. In fact, the Exchequer had advanced £1,356 million by 31st March of this year. The figure of £682 million must therefore be added to the figure of £1,356 million to produce the limit of the advances that the Treasury may make to these nationalised industries by the end of April, 1961. That addition comes to £2,038 million and it is that sum rounded up which produces the figure of £2,050 million.
I have considerable sympathy with hon. Members who find all this very confusing and who wonder whether it is the best method of providing Parliament with information about the amounts which the nationalised industries will be borrowing from the Exchequer in the coming year and of authorising the Exchequer to advance that money. I frankly admit that the present situation in really the result of piecemeal development and I should not wish tonight to define it as being either


perfect or the best which could be devised to meet the requirements of the Committee.
The problem of the relationship between the nationalised industries and the Government, on the one hand, and Parliament, on the other, is very far from being a simple one. Parliament has several separate and legitimate interests in this matter, and we need to find a procedure which will give adequate opportunity for all those interests to be safeguarded. Parliament is interested and entitled to be interested in the investment programmes of those industries, to be informed of the broad lines of those programmes, and to be able, if it wishes, to examine and debate them before they are put into execution.
These investment programmes are likely to be available in the autumn. I made the point just now that, though the investment programmes will be available in the autumn, the amounts which will need to be borrowed from the Exchequer by the industries concerned cannot be known until much nearer the end of the financial year, that is to say, much closer to the beginning of the next financial year.
Two separate pieces of information are needed—first, the programmes, available in the autumn, and then at a later stage, February or about then, the estimated figures of what will need to be borrowed to meet those programmes during the coming financial year. The industries are not able to estimate their borrowing needs much before February, because those needs will depend, among other things, on their commercial prospects.
Secondly, Parliament is interested and entitled to be interested in the financial implications to the Exchequer of those investment programmes. Thirdly, Parliament is interested and entitled to be interested in and to be told if during the course of the year the financial implications for the Exchequer of the activities of the nationalised industries turn out to be very different from those which they were expected to be at the beginning of the year, namely, the expectations on which the Budget was based. Parliament has these three interests in respect of the nationalised industries, both as a group and also one by one.
Quite separate from these is Parliament's right to control the actual

amounts of money which the individual nationalised industries are entitled to borrow, whether from the Exchequer or from any other source, through the borrowing Bills.
Those are the various parts of the puzzle which faces us. The Government now are examining these questions urgently in view of the representations which have been made from the House of Commons. It is our expectation that by the autumn we shall be able to make new proposals—agreeable, we hope, to the House of Commons—for the handling of these matters in the future on a more satisfactory basis, including supplying to the House of Commons information which hon. Members can examine and debate, both on the annual investment programme of each industry and, at a later stage, the estimated amounts which each industry will require to borrow from the Exchequer in the coming year.
If we are to meet the wishes of hon. Gentlemen, the essential thing is that those pieces of information should be available to the House of Commons for examination and debate before the event, before this programme is put into operation. In the light of this, I hope that the Committee will decide in due course to approve the Clause as it stands.

Mr. H. Wilson: In rising again, I want to make it clear that I do not want to preclude the right of any of my hon. Friends who I know were intending to address the Committee from doing so, but in view of the rather important statement made by the right hon. Gentleman I perhaps ought to make two points.
First of all, he has not been able this morning to give us in any detail what he will do. All he has said is that he is considering it, and he admits that the House has a right to information on the points he has outlined. He has not said how it is to be done—whether by Bill, White Paper or what—or what facilities there will be for debate. Therefore, we on this side must obviously reserve our comments until we see the proposals. However, lest he should think that it is to be as easy as all that, I say at once that we shall watch for this with some degree of suspicion.
That brings me to my second point. Since the Chancellor has not completed


his deliberations and discussions—he says that the Government are still considering the matter—I hope that he will include in his considerations the equal, if not greater, need there is for the House to be provided with similar information about private industry. It would be extremely one-sided if he took into his consideration only the publicly-owned industries and not the privately-owned ones as well. And I am glad to see that the noble Lord the Member for Dorset. South (Viscount Hinchingbrooke) is so fair-minded as to concede that by what I took to be a gesture of assent.
I ask the Chancellor to go further; to look at the whole field of Government contracts and to see whether the House cannot be given information of what the Government expect to spend on such contracts. Some of them will, of course, come within the realm of security, but I think that the Committee will agree that we have recently had considerable evidence—particularly in regard to Bluestreak—of very serious waste in matters over which the House had no control whatsoever, whether ex post, ante post or anything else.
I therefore hope that if he is to do this in relation to the nationalised industries he will extend his examination to everything in which Government money is involved; particularly with those contracts that run four or even five years ahead—perhaps on a cost-plus basis—because we should like to know each year what the Government propose to spend in the following year. The Chancellor will have a better chance of satisfying the Opposition if he is scrupulously fair over this, and regards it as an exercise in the control of public expenditure and not just another episode in the vendetta of hon. Members opposite against the nationalised industries.

Mr. Amory: I only want to say that I am taking note of everything said by my hon. Friends and by hon. Members opposite. In the meantime, I perfectly understand that every member of the Committee will wish to reserve his position until the Government are able to announce their proposals.

Mr. Jack Jones: At the risk of being unpopular by speaking now—having sat through the debate—I want to suggest

that for once the hon. Member for Kidderminster (Mr. Nabarro) should be encouraged to pursue the line of thought in these eleven Amendments. I welcome the fullest opportunity for the expenditure of public money on the nationalised industries to be examined on the Floor of the House, and from there to the taxpayers, because the more information the taxpayers get on that subject the more will they understand the extent to which those industries—now so necessary to keep us in the world's markets and to put our economy on a sound basis—were so sadly and badly neglected when they were in the hands of private enterprise.
The colossal sums of money that now have to be spent on them are a clear indication of the great need there was for that money to have been spent earlier on the coal industry, the railways, airways, aircraft and the rest. The more information we can get to the public in this way, the greater will be their awareness of the lack of real control there was when these industries were in private hands.
Yesterday, an Answer to a Parliamentary Question revealed that steel, my own industry, had to spend £8 million last year in bringing sheet steel from abroad, for the very simple reason that the capacity was never at any time put in to meet full employment and to meet the needs of a fully employed, sound economy in this country.

1.45 a.m.

Mr. T. L. Iremonger: I was sorry to notice the tone in which the hon. Member for Rotherham (Mr. Jack Jones) finished his remarks, because I thought that he started on altogether the right note, saying that my hon. Friend the Member for Kidderminster (Mr. Nabarro) should be encouraged to pursue his line of thought. I think that the Committee would be well advised to unite behind my hon. Friend. It was very gratifying to find, although he had shown singularly little enthusiasm for the ideas of my hon. Friend earlier in the debate, that the right hon. Member for Huyton (Mr. H. Wilson), when he realised that my right hon. Friend the Chancellor had opened his mind in the way he did, was very quick to climb on the band-wagon and say that he could not go far enough for him.

Mr. H. Wilson: The hon. Gentleman should have listened to the speech I made earlier, when I made clear that I agreed with certain of the points which the noble Lord for Member for Dorset, South (Viscount Hinchingbrooke) had made, but I said that, if we were to extend the control of expenditure or scrutiny in that way, it should be widened to cover the othe things I mentioned. There was no question of climbing on the band-wagon.

Mr. Iremonger: One need only point out that the initiative did not exactly come from the opposite side of the Committee. It has been always the initiative of this side to argue that the nationalised industries should be properly accountable.
It is a great pity that this debate should be poisoned by the pro-nationalisation and anti-nationalisation schools of thought, both of which, I suggest, have been dead for the last five years and should now be interred. The Committee will have been gratified to hear the closing words of my right hon. Friend. There was a moment, I confess, when I thought that he might possibly answer the question raised by my hon. Friend the Member for Kidderminster as though it could be answered in terms of arithmetic. In fact, it is an issue of profound constitutional, economic and Parliamentary importance.
I think that my hon. Friend may well feel that he has opened a very wide question this evening which has been received in an extremely hopeful spirit by my right hon. Friend. He gave very slight indication of what his proposals would be, but I am quite sure that we are tonight, in considering these Amendments, touching upon a question which has been profoundly disturbing the country for many years, ever since we first realised that the opposition had no idea of what they meant by nationalisation and we, in our turn, realised that we had not the faintest idea of what to do about it, having been saddled with this unwanted incubus.
It is now a part of our social and political system. It raises very difficult constitutional questions which we are not yet in sight of solving. The Committee could do no better tonight than wish my right hon. Friend well in his deliberations and hope that he will bring to the

House a scheme which will reassert the principle of Parliamentary accountability and which will enable us to say to our constituents that we have some idea of the part which is being played by the nationalised industries in the economy as a whole.
That is what it really comes to. The nationalised industries are one of the largest factors in the control of the economy which devolves upon the Government in a modern State. Parliament has for far too long been helpless. It is significant that the initiative in remedying this state of affairs has come not from the ranks of the Opposition but from the Government benches. I am sure that the country will be grateful if, in two years—I think that is the earliest we can hope for—we are able at last to evolve a scheme whereby we are able to discharge properly our responsibilities in regard to these very important industries and this very important part of the economy.

Mr. Mitchison: Far be it from me to seek to minimise the differences of opinion in the party opposite. I think, however, that the hon. Member for Ilford, North (Mr. Iremonger) has forgotten that it was his right hon. Friend the Leader of the House, from the Government benches, who recently showed no disposition to enlarge the scope of Parliamentary Questions about nationalised industries. Whether he was right or wrong is not the matter with which I am concerned today. That, at least, did not come from our side of the House.
I wish to make two points. I entirely agree that this is a serious matter. I further agree that it is not just a question of the nationalised industries. What we have to consider is the Parliamentary control over Government expenditure, both in relation to loans and grants to private industry and in relation to ventures of which Blue Streak was, perhaps, the most recent instance.
There are already two engines of Parliamentary control for Government expenditure. One is the Public Accounts Committee and the other is the Estimates Committee. They do their work very well. One of the difficulties about our procedure is that the work they do is so farely debated. What they are doing is to carry out a fairly detailed examination of various parts of the national


expenditure. It is not something that the House of Commons, sitting as a House or Committee, could do. It is something that could be done by smaller Committees. The Estimates Committee does its work, as we all know, through Sub-Committees that are quite few in number. I hope that whatever the Government propose—

Viscount Hinchingbrooke: On a point of order, Sir William. This is not done in a spirit of spiteful revenge against the hon. and learned Gentleman, but he pulled me up when your predecessor was in the Chair about half an hour ago twelve or fifteen times for wandering a little from the terms of the Clause. Is it proper now, on the Amendments, to talk about the Select Committee on Estimates and the Public Accounts Committee?

Mr. Mitchison: Further to that point of order, Sir William. I am only following what the Chancellor said. If I am wandering in any way from the paths of strict order, it is only in strict reply to what the Chancellor said in his speech.

The Deputy-Chairman: What the noble Lord experienced while he was speaking is in my recollection, and I appreciate the point he has made. The debate has, however, gone rather wide, very much, I believe, to the convenience of the Committee. With that in view, I allowed the hon. and learned Member for Kettering (Mr. Mitchison) to proceed.

Mr. Mitchison: I have made my point, but let me repeat it shortly. I do not think that the House, sitting as a whole, is in a position to examine this kind of financial question. We ought not to neglect the possibilities of the two Committees that we have for the purpose.
I come now to my second point. I rather agree that the Clause is getting perilously near tacking. A Budget is, after all, Supply for the forthcoming year and it includes taxes that are intended to have a permanent character. What it does not include is taxes of an annual character that are to come in succeeding years. The tacking matter is very old, and I shall not trouble the Committee at this hour of the night with Erskine May, but if we apply that to the nationalised industries position, if the Clause had contained what I wish it had

contained—provisions without a time limit—it would not have been tacking any more than a permanent tax is tacking. If it had limited itself entirely to one year, again it would not have been tacking any more than the annual charge on Income Tax is tacking. But when one takes one year and fixes the figure and then provides for two years ahead, neither of which is the year we are considering in this Budget, that is doing exactly what in the matter of taxation would be objectionable and is therefore objectionable in this case.
A one-year arrangement may or may not be defensible, but an indefinite arrangement, such as we on this side of the Committee have proposed on earlier occasions, would be preferable to this three-year hybrid which now appears with its Treasury Orders and affirmative procedure for the two succeeding years.
It is for that reason that I think that this matter goes beyond the question of the nationalised industries. It is a question of the proper control of Parliamentary expenditure as a whole, not merely of advances to nationalised industries. Secondly, if we are to do it, do not let us ask the House as a whole to do something which it has always chosen to do by Committees, because it cannot do it as a whole and its Committees can. If its Committees are used for the purpose, let us debate their reports. Thirdly, if this is tacking, and I repeat that it is getting very near it, it is due to the fact that the Chancellor of the Exchequer has not accepted the views of this side of the Committee and has insisted on putting a time limit of three years in the curious form he has chosen in this matter.

Mr. Nabarro: I thank my right hon. Friend for the conciliatory fashion in which he has met the objections of my hon. Friends and myself. I particularly liked his choice of words and I repeat them so far as I was able to write them down as he uttered them—"Parliament has the right to know, individually and in total, the capital sums to be spent by the nationalised industries". That was the whole purpose of my eleven Amendments. If in the coming autumn the Chancellor is able to implement precisely the promise in the form of words he employed tonight, then I am confident that my hon. Friends and I will be well satisfied.
On a personal note. With Clause 72 of the Finance Bill I am gratified to be able to end my lengthy operations during the debates on the Budget and the Committee stage of the Finance Bill, on a note of amity with my right hon. Friend and to thank him most warmly for the few crumbs of comfort which he has given me at the end of these lengthy proceedings.
With those words, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 73 ordered to stand part of the Bill.

Orders of the Day — New Clause.—(PENALTY FOR FAILURE TO GIVE INFORMATION AFFECTING INVESTMENT ALLOWANCES.)

In sub-paragraph (4) of paragraph 3 of the Second Schedule to the Finance Act, 1954 (which imposes a penalty equal to twenty pounds plus three times the amount of the investment allowance on a person failing to give information required under that paragraph) for the words "equal to twenty pounds plus three times" there shall be substituted the words "not exceeding fifty pounds plus".—[Mr. Barber.]

Brought up, and read the First time.

Mr. Barber: I beg to move, That the Clause be read a Second time.

Mr. H. Wilson: On a point of order. We are not quite clear about whether you put the Question on the Seventh Schedule, Sir William. Do you intend to put it after we have taken the new Clauses?

The Deputy-Chairman: My understanding is that I should put that Question after the new Clauses.

Mr. Barber: This is the first new Clause and its purpose is to reduce the penalty for a failure to give information about the events necessitating the withdrawal of an investment allowance. The penalty is reduced from £20 plus three times the amount of the allowance to a sum not exceeding £50 plus the amount of the allowance.
The Committee will remember that the law provides that in certain circumstances the investment allowance is to be withdrawn, for example, if within three years

of the date when the expenditure giving rise to the allowances was incurred the asset is sold to a person resident abroad who is not liable to United Kingdom Income Tax; or, for example, if it is appropriated to some non-trading use. The person who has received the allowance has to give notice to the inspector if, to his knowledge, either of these or other specified events would entail a withdrawal of the allowance. It is thought that the penalty is too high in relation to other penalties in the Bill, and that this new penalty is right. I commend it to the Committee.

2.0 a.m.

Mr. Mitchison: There is one point which troubles me a little about this. We had the Attorney-General accepting, earlier in the day, an increase in the penalty for a person who failed to give information about his liability to tax. Of course, this is not exactly a similar case, but there is something in common between the two and the final result here is markedly different from what the Attorney-General has accepted. I should have thought that at this hour it was not a case of resisting this Clause. For one thing, I should like to see again what the Attorney-General said, but I think we must reserve our right to come back to the matter at a later stage of the Bill in the light of what has happened in the other case.
Might I also ask the Government Front Bench to look into the position in relation to the two Clauses and see if they do not think they have gone a little far in reducing the penalty in this case?

Mr. Barber: We will certainly accede to that request.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Mr. H. Wilson: Mr. H. Wilson rose—

Mr. Amory: I beg to move, That the Chairman do report Progress and ask leave to sit again.
I think that the right hon. Gentleman the Member for Huyton (Mr. Wilson) and I have the same idea in our heads. I think that the progress which we have made today has been extremely satisfactory, and we have dealt with several important subjects. I should like to thank the whole Committee for having


helped us to make such progress, and I further think that the whole committee will be behind me in asking that the Chairman should report progress and ask to sit again.

Mr. Wilson: Obviously, we will support this motion, but it is a matter of regret to some of us that it was not put an hour or two ago. In view of the progress which we have made, I think it will gladden even the heart of the Patronage Secretary: that is, if he has a heart, for it is not an occupational disease of Patronage Secretaries.
However, the Chancellor is right. We have got through some thirty Clauses and a new Clause, on the whole in a very good tempered way, although I will not go back on one particular episode. I would have hoped that we could have got as far as we have by midnight without keeping the Chancellor out of his bed for so long. But the majority of the Amendments have come from his side of the Committee, as well as the majority of the talking. We do not object, because all hon. Members are equal in this matter, but when it was suggested that we were holding up progress on the Clause relating to Premium Bonds I thought there was some most unjustified comment from below the Gangway on the Chancellor's side.
There has been great self-denial, but the self-denial, which we exercised tended to become a little more difficult at times and that is perhaps why we went on for longer than we should. Hon. Members opposite should not test the restraint we have shown. We still have the new Clauses to deal with after the Recess.
I know that the Patronage Secretary would have liked to get some of the new Clauses disposed of before the Recess. He will now have that joy to look forward to. I hope that we shall get through them with the same expedition and thoroughness as we have shown in dealing with the Bill so far.

Question put and agreed to.

Committee report Progress; to sit again this day.

STRONTIUM 90

Motion made, and Question proposed, That this House do now adjourn.—[Mr. J. E. B. Hill.]

2.6 a.m.

Mr. John Morris: This is a late hour to start a debate on what I consider to be a very important subject, namely, the Second Report of the Agricultural Research Council on the amount of Strontium 90 in milk and other agricultural products in the United Kingdom. I am conscious of the fact that there are two interests at stake here. First, there is the interest of the producers, which is not to have too much publicity on this matter and, secondly, the interest of the consumers. I am also conscious that all producers are consumers, and although publicity now might affect their interests, in the long run it is of vital importance that the public—my constituents and those of all other hon. Members—should be aware of the dangers that have arisen as a result of the nuclear testing which has gone on all over the world. We should be told what the dangers are—or, if it is said that there are no dangers or hazards, we should he given a proper assurance on the matter by the Government.
Strontium 90 is a radioactive substance given off by nuclear explosions. It is most harmful. Before the series of nuclear tests took place it did not exist anywhere in the world, at least in its present radioactive form. Today, each one of us is absorbing Strontium 90 in our bones, through our diet. I do not intend to adopt an hysterical tone, but the public want reassurances.
No one anticipated such a rapid increase in the amount of contamination in our food, the soil, and in human and animal bones. The unit of measurement adopted in connection with this complicated and scientific matter is the ratio of Strontium 90 to calcium. In 1954, when the measurements were first taken, the ratio in milk was 0·5; today the average throughout the United Kingdom is 9·6. Indeed, there are wide local variations, from 7·3 in south-east England to the highest average for any area in the country, of 14·89 in west Cornwall Wales is not far behind, with 14·39. There are tremendous local variations within areas. In Cardiganshire, where I


was born and bred, the figure is three times the national average. It is also high in Cumberland, with 23 units.
I now turn to the contamination of another part of our diet—drinking water. In this case the measurement is taken on another basis. Cardiff, with 1·7 units, has today four times more Strontium 90 than in 1957; Birmingham has three times more; Liverpool has doubled, and Manchester has increased by three times. The ratios for Cardiff and Birmingham, respectively, are four and five times higher than that for Oxford. It is of interest to the inhabitants of these towns that they draw their water supplies from the Welsh hills.
I will not go in detail into the amounts of Strontium 90 in the bones of young children who have been tested in recent years. In 1956 the average in the United Kingdom was ·55 units. Now the average child in the United Kingdom has 2·7 units. The maximum recorded has been in a child in Manchester with 6·9 units. There are several in Glamorgan, part of which I have the honour to represent, with between 3·5 and 3· 6 units. The importance of these figures lies in the fact that there has been a startling increase in a few years, but no one anticipated when the tests were first taken that the increase would have been as startling as it is today.
Over 100 samples have been taken from the bones of young children, but few have been taken from the far West. Generally the incidence of contamination has been higher in the West than in other parts of the country. I should like to know if the Parliamentary Secretary considers that there has been sufficient testing of the bones of young children in the counties in the West, which are the most affected by contamination today.
Those are the facts. It may be asked why milk is of such importance. The answer is that milk is in everyone's diet. It is easy to test. It is produced all the year round, and it plays a considerable part in the diet of young children who are most affected by it. They partake of milk in the most important period of their lives, in the bone-formative years. It is known that Strontium 90 is ten times more effective in giving young children cancer than in the case of adults.
I submit that the key part of the Report is found on page ix which states:
It appears that the 12-month mean of contamination of milk for England, Wales and Scotland increased by 40 per cent. between December, 1958, and June, 1959. The values rose relatively steadily, during the intervening period, but such information as is available from samples collected after June, 1959, shows the values have since decreased.
While, on the one hand, we have had a startling increase, the samples available show that there has been some decrease. The samples last available were taken in June, 1959. Since this is a matter of vital importance, I wonder whether the Parliamentary Secretary can say what is the position today. Have later samples borne fruit along the same lines? Has the increase been continued since June, 1959, and what is the position to date?
We know that the increase of 40 per cent. in the relevant months was caused by the testing of nuclear weapons in the northern latitude between November, 1958, and May, 1959. As we know, there has been a cessation of those tests, and I wonder if the Parliamentary Secretary could assure us of the present situation.
The other part of the Report to which I would like briefly to refer is that which states
It may therefore be assumed that no further increases in the level of Strontium 90 in milk are to be expected if weapon trials are not resumed and the rate of fall-out consequently continues to decrease.
That is a reassuring statement, and I hope that in view of the importance of this Report, the Parliamentary Secretary, through the Minister of Science, will bring it to the notice of the Prime Minister, to show how vitally important it is to the ordinary people of the country that every pressure possible is brought to bear on the necessity to cease these tests.
Another question is whether the key factor to the contamination of milk and other products is recent deposition or accumulative deposition. What is the key factor? The Report contains a long discussion on the subject and does not come down firmly either way. The Report suggests that the evidence tends to the view that it is recent evidence, but there is a lack of complete evidence, and the Report states that the Committee has not the whole answer and would like more evidence on the point. Will the


Parliamentary Secretary assure me that all possible research is undertaken in this subject in order that we may discover whether recent deposition or accumulative deposition will be the cause of contamination in the future?
Will the Government explain what is the significance of these figures? Are they at present a hazard? One school of thought suggests that any contamination is dangerous. It says that the relationship is linear and that the number of cancers increases directly with the amount of Strontium 90, even when it is present in small amounts. There is a second school of thought which says there is a threshold of safety. The Medical Research Council states that this is 100 units, that this level must not be exceeded and that if it rises much above ten units it should be a matter of immediate consideration.
I hope that the Parliamentary Secretary will tell us what is the correct view. I hope that there is a threshhold of safety. It would be a great reassurance to the public if it could be scientifically established that there is a threshhold of safety. Or is that merely a pious hope of the Medical Research Council? As I understand it, the Council intends very shortly to produce a White Paper on the spread of the hazard and its possible effects. The hon. Lady may be able to indicate when the Medical Research Council intends to issue that White Paper.
Will the Parliamentary Secretary tell me how much money is being spent on research into this very important subject? In recent months in the House we have heard reports of millions of pounds being spent on armaments and on missiles which will never be used and, indeed, which are never completed. It may be that this morning the Parliamentary Secretary will tell us that an insignificant sum is being spent on the research which is being carried out into this vital question. We should like to know exactly how much is being spent in order that we can compare it with the expenditure on weapons.
If there are any handicaps, other than finance, such as the shortage of scientists—and I am the first to concede that in this matter we need scientists of the highest calibre—we ought to be told why there is a shortage and what steps

the Government are taking to eliminate it.
I am told that 40 per cent. of this country's milk is tested in accordance with the arrangements of the Agricultural Research Council and that this is taken from 200 milk depôts. Is there a very high rate of testing of milk from depôts in the west of the country? What is the method of testing in those depôts? The milk for some depôts, as I know well, comes from a wide area. When it is stated that a sample is taken from a certain depôt, is it taken from the bulk of the milk exported from that depôt? When there is such a wide variation in the sources of milk, including both highland and lowland areas, is there any differentiation between the places from where the milk comes? It might have come from an area of high density or an area of low density. We should like to know the exact significance of the sampling from these 200 milk depôts.
Local authorities in Wales have made a strong plea for special machinery to be set up in Wales to test the amount of Strontium 90 in food and other products. Several arguments have been advanced. I do not intend to go into them now, for they are apparent to all of us. Medical officers of health have certain statutory duties to carry out. The question I wish to ask is whether they have the facilities for carrying out these statutory duties as regards the contamination of food. If the local authority is not in one of the special areas where testing is carried out according to the Agricultural Research Council then it means that it is unable to discover whether food is contaminated or not.
There are certain areas not in the designated areas, which might be called the fringe areas. How are they catered for? Is the Parliamentary Secretary satisfied that sufficient attention is given in this field and have the local authorities done anything at all about the setting up of a special laboratory in the West?
The last remaining point I wish to make is that there are considerable references in the Report, into which I will not go at the moment, as to the effect of lime on pastures and whether lime does result in the diminishing of


the amount of contamination of the soil and of the products from the soil. My hon. Friend the Member for Brecon and Radnor (Mr. Watkins) put that point to the Parliamentary Secretary to the Ministry of Agriculture in the debate on the lime subsidies. Has sufficient research been made in this respect with regard to the effect of lime on pastures which are contaminated?
Lastly, we are discussing—though we are few in number at this very late hour—what I consider to be one of the most important subjects that have been discussed for a long while in the House. Of course, it may be that while on the one hand science has managed to push back death, on the other hand it has crept up. It may be that not we ourselves or our children will be affected, but that generations unborn will be affected by the amount of contamination in the soil and in the products of it.

2.22 a.m.

The Parliamentary Secretary to the Ministry of Health (Miss Edith Pitt): I welcome this debate, even though it is taking place at a late hour, because it gives an opportunity to dispel any idea that milk, whether it comes from Wales or any other part of Great Britain, is dangerous. I can well understand the anxiety which rumours or stories can cause, particularly to mothers.
Milk is an essential part of every child's nutrition, and we are proud of our Welfare Foods Service which provides a pint of milk every day, cheap or free, for the expectant mother and the child under five. Then the School Milk Service takes over and provides free milk for every child throughout its school life.
These benefits have played no small part in the health and growth of the children of this country. Nor is the value of milk confined to childhood. I can appreciate the concern that the wholesome quality of milk should be maintained. We have overcome the danger, which was once so common, of tuberculosis being caused by infected milk. It would be terrible indeed if this risk were to be replaced by another in the form of Strontium 90.
For this reason, I can assure the hon. Gentleman, we take this matter seriously. The experts, however, are emphatic that

the present levels of Strontium 90 in milk are no cause for alarm or concern. I would stress that there is no complacency on the part of the Government on the dangers of fall-out. We have an effective monitoring programme which is planned and supervised by an expert sub-committee of the Agricultural and Medical Research Councils and the Development Commission.
The results of the programme are published from time to time in reports on rain, drinking water, the human diet and human bone. The efficacy of the programme depends on careful statistical design which ensures that samples are truly representative, and on the accurate measurement of small amounts of radioactivity. Statistical design is particularly important in the monitoring of food, which contains over 90 per cent. of the Strontium 90 which enters the human body in the United Kingdom.
The hon. Gentleman has suggested that the Welsh local authorities would themselves like to take samples and, having received a report on them from a Welsh laboratory, assess the results independently of the Government. Such an argument is understandable even though it overlooks the independent authoritative nature of the research councils from which the Government get advice. There are arguments against it which I will not develop fully. Surveys should cover the pattern of production and consumption of food so that statistically valid sampling schemes can be designed. It is much cheaper in time and effort for data covering the whole country to be considered together. Experience gained in one locality can then be applied, with suitable modifications for local conditions, to sampling elsewhere.
Elaborate analytical procedures are necessary to detect Strontium 90 in the minute quantities at present found in the human diet. It is much more efficient and economical to do the work in relatively large laboratories where the skilled directing staff can be properly used. The present organisation of survey work co-ordinates results so that the general situation can be assessed by the Medical Research Council. This overall assessment would be much less easy if part of the work were carried out on a regional basis, as the hon.


Gentleman has in mind. If there were to be separate centres for Wales, it would be in addition to the present effort. It would be expensive and the results, being random ones, would at best add little to the value of the main programme and at worst might confuse the picture. This is not a purely financial objection; the new centre would create a further demand on the limited scientific manpower available for nuclear health and safety work.
The hon. Member has said that the present scheme involves fortnightly samples from over 200 depôts which handle over 40 per cent. of the milk produced in the United Kingdom. In answer to his point about what he called the fringe areas, I would say that this is reinforced by samples from special areas which, from geographical location, may be expected to yield the highest figures, and during 1959 over 900 samples of potatoes, green vegetables, eggs, flour and other foods were obtained.
In international discussions the British plan has been held up as a model for all nations to copy because of its excellent statistical design. We feel that there is no call for a special expense in monitoring, neither do I think it can be argued that Welsh sources fail to get a fair share of the fall-out monitoring programme.
The hon. Gentleman asked some questions and I should like to thank him for his courtesy in informing me of them in advance so that I might be advised on what he called a very technical and scientific subject. One was about the amount of money spent on research. I am not able to give the total figure to the hon. Gentleman, because the research is done in many spheres and we cannot currently calculate what is spent not only through the various councils but through other bodies engaged in nuclear research. But I can tell him that the work is going on at a number of centres and that finance is not an obstacle. On the adequacy of scientists, about which he also asked, I am advised that scientists are being recruited and trained as needed for the development of the programme.
It is well known that deposition of Strontium 90 varies more or less with the local rainfall and that therefore the general level for Wales is above the

national average. I am advised that the local variations in the deposition of Strontium 90 may therefore, at present levels, be ignored for all practical purposes. Perhaps the position may be summed up by the address given by Dr. R. Scott Russell to the National Farmers' Union at Beaumaris on 11th May in which he said:
We could say that man's increased exposure to radiation from Strontium 90 was comparable to that which, unknowingly, many people had accepted down the ages by moving from one district to another.
On the question of the acceptable levels in bone, the proportion of Strontium to calcium which is transferred from diet to human bone is only about one-quarter of the proportion of Strontium to calcium in the diet. This is a fact which I ought to emphasise, because it is not adequately realised. In 1956 the Medical Research Council expressed the view that the level of Strontium 90 in the bones of the general population should not exceed 100 Strontium units, to which the hon. Gentleman referred when he asked me about the hazards. The Council said that, if the level showed signs of rising greatly beyond one-tenth of this value, namely, 10 Strontium units, it would be desirable to give immediate consideration to the situation. The most recently published measurements indicate that the average levels of Strontium 90 in human bone are well below these figures.
The hon. Gentleman suggested that only one or two of the samples of children's bones were taken from the West. I take it that he means the west of the Principality. Again, I have had an opportunity to make inquiries about this. I am advised that scientists try to get these bones, but so few are available from that area—very happily, as the hon. Gentleman will agree—that it is difficult to obtain samples.
A report has already been published giving a simplified account of the role of calcium and Strontium in the body. The Medical Research Council is at present undertaking a further comprehensive assessment of the significance of all the available evidence on the exposure of man to ionizing radiations, which will include an appraisal of the effects of radioactive contamination of food by fall-out.
The hon. Gentleman specifically asked me if I could give the latest figures. I am happy to be able to tell him that


the report for the second half of 1959 is at present in preparation, and I hope that it will be available within the next month or two.
On the question whether contamination is caused by cumulative effect of Strontium 90 or by recent falls, I am advised that it is predominantly by recent falls. The latest figures are not yet published, but they show that the trend is downward and this is expected to continue.
Liming is really a question for my right hon. Friend the Minister of Agriculture, and no doubt the hon. Gentleman will have an opportunity to pursue this matter in the more civilised hours of this morning. While it is recognised that liming can in certain areas reduce the uptake of Strontium 90 from the soil, an extensive liming programme in the remote hill areas which show the highest levels is scarcely a practical proposition. At present levels local variations can be ignored.
I should like to make one further point on the question of the elimination of milk from the diet, because I regard this as the most important point arising from the debate. The most recently available figures give no indication that any alteration should be made to the diet of children in this country on account of contamination of milk from radioactive fall-out. Although milk is the main source in the diet of Strontium 90 from world wide fall-out, the suggestion that, for this reason, it presents a special hazard is incorrect. Hazard is best measured in terms of the ratio of Strontium 90 to calcium in the diet as

a whole, and if milk were removed from the diet the calcium which it provides would have to be obtained from some other source, unless the diet was to be seriously impaired. The resulting ratio of Strontium 90 to calcium in the diet would be unlikely to be greatly changed.
Finally, while this matter is one which should be and is being carefully watched, there is no reason to be alarmed about any current levels in milk so far recorded. The simple truth is that the level is still so low that there is no ground for immediate consideration; that the trend is downward and should continue so unless air tests are resumed; that it is so small that local variations—for example, between Wales and East Anglia, and Cumberland—can, for practical purposes—though not for scientific analysis—be ignored.
Far from being complacent, the Government have a system of monitoring that is as comprehensive as any in the world, they make a practice of publishing all monitoring reports, and they have a panel of assessors of the best available scientific opinion whose periodic assessments have been published and are available in this country.
I hope that, seriously though one takes the matter, this discussion will have removed some of the concern—the unjustified concern—about the risk in milk. For that reason, I am very happy that the hon. Gentleman has raised the matter on the Adjournment.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Three o'clock.